Comprehensive Company Analysis by OCBC Investment Research
Date: 13 January 2025
Broker: OCBC Investment Research
United Overseas Bank Ltd (UOB SP)
United Overseas Bank Ltd (UOB) has kicked off 2025 with remarkable momentum, achieving a strong 3.25% surge in share price within the initial six trading days of the year. The stock reached an intra-day high of SGD 37.94 on 9 January 2025, touching the fair value estimate of SGD 37.50 set by OCBC Investment Research. This reflects an impressive 12.2% gain since the last report in November 2024, where it was trading at SGD 33.50 with a BUY rating.
The re-rating of UOB shares is attributed to expectations of sustained high interest rates throughout 2025, which bodes well for net interest margins. Current market consensus anticipates flat or marginally positive earnings, but the improved interest margin outlook could lead to mid-single-digit growth. Despite these promising signs, due to the strong share price performance, OCBC has downgraded its recommendation to HOLD while maintaining the fair value estimate at SGD 37.50. The bank’s leadership in ESG practices, including robust consumer protection mechanisms and strong corporate governance, further solidifies investor confidence. However, areas such as the adoption of a more comprehensive business ethics framework remain areas for improvement.
DBS Group Holdings Ltd (DBS SP)
DBS Group Holdings Ltd is another standout performer among Singapore’s banking stocks. Trading at SGD 44.13, the company has a market capitalization of USD 91,342 million. With a historical dividend yield of 4.8% and forward yield of 5.0%, DBS continues to entice income-focused investors. The stock is trading at a historical P/E ratio of 12x and a forward P/E of 11x.
The bank’s strong fundamentals, supported by high interest rates, are creating a conducive environment for robust net interest margins. While OCBC’s HOLD recommendation reflects a cautious stance, DBS remains a favorite for investors seeking a stable and reliable financial institution with a well-balanced risk profile.
Xiaomi Corp (1810 HK)
Xiaomi Corp has set an ambitious target for higher electric vehicle (EV) shipments in 2025, reflecting its commitment to expanding its footprint in the EV segment. OCBC has assigned a BUY rating with a fair value estimate of HKD 40.50. This upward potential is supported by Xiaomi’s strategy to diversify its revenue streams through innovative product offerings and deeper market penetration in key regions.
The company’s focus on leveraging emerging growth trends such as EVs positions it as a high-growth stock, making it an attractive option for investors looking to capitalize on the evolving technology landscape.
Tencent Holdings Ltd (700 HK)
Despite headwinds from its inclusion in the US list of Chinese Military Companies, Tencent Holdings Ltd demonstrates resilience and a strong growth trajectory. OCBC has reiterated its BUY rating with a fair value of HKD 560.00. Tencent’s diversified portfolio, which includes gaming, cloud services, and social media platforms, continues to underpin its robust financial performance.
The company’s ability to navigate regulatory challenges and maintain its leadership in China’s tech ecosystem makes it a compelling investment opportunity for long-term investors.
Keppel DC REIT (KDCREIT SP)
Keppel DC REIT, trading at a fair value of SGD 2.44, is well-positioned for growth in the data center space. OCBC’s BUY recommendation underscores its potential to benefit from increasing digitalization and demand for data storage solutions. The REIT’s strong asset portfolio and proactive management strategies ensure stable returns for investors.
China Mobile (941 HK)
China Mobile continues to enhance shareholder returns, earning a BUY rating from OCBC with a fair value of HKD 93.10. The telecom giant’s commitment to expanding its 5G infrastructure and offering attractive dividends solidifies its standing as a preferred pick in the telecommunications sector.
Apple Inc (AAPL US)
For 2025, Apple Inc remains a company to watch. With a HOLD recommendation and a fair value of USD 259.00, OCBC highlights the tech giant’s focus on innovation and its potential to drive growth through new product launches and enhanced service offerings. While challenges persist, Apple’s resilience and market dominance make it a stable investment choice.
Singapore Post (SPOST SP)
Singapore Post has been rated as HOLD with a fair value of SGD 0.54. The company faces challenges in adapting to the evolving postal and logistics environment, which has affected its growth prospects. OCBC remains cautious on the stock, awaiting visible signs of a turnaround.
China Construction Bank (939 HK, 601939 CH)
China Construction Bank is considered the preferred play among Chinese banks, earning a BUY rating with fair values of HKD 8.07 and CNY 10.11, respectively. The bank’s stable asset quality and strong balance sheet provide a buffer against economic uncertainties, making it a robust investment option in the financial sector.
China Longyuan Power (916 HK, 001289 CH)
China Longyuan Power, with fair values of HKD 8.40 and CNY 18.00, respectively, continues to attract investors seeking exposure to renewable energy. OCBC’s BUY recommendation reflects the company’s strong fundamentals and growth potential in the clean energy sector.
Conclusion
The latest Market Pulse report from OCBC Investment Research provides a comprehensive analysis of several high-performing companies across diverse sectors. While some companies like UOB and DBS benefit from the high-interest-rate environment, others such as Xiaomi and Tencent are leveraging technological advancements to drive growth. With carefully considered BUY and HOLD recommendations, OCBC offers actionable insights for investors looking to navigate the dynamic market landscape in 2025.
