DBS Group: Record-Breaking Performance in 2024
DBS Group (\$44.68, up 0.36%) achieved an exceptional financial performance for 2024, surpassing market expectations. The bank’s net profit rose by 11% year-on-year to SGD 11.4 billion, while return on equity stood at an impressive 18.0%, one of the highest among developed market banks. Total income grew by 10% to SGD 22.3 billion, driven by an expanded net interest margin in its commercial book, record-breaking fee income exceeding SGD 4 billion, and robust treasury customer sales.
For the fourth quarter of 2024, the bank reported a 10% increase in net profit year-on-year to SGD 2.62 billion. Total income for the quarter also rose by 10% to SGD 5.51 billion, with stable cost-income ratios and sound asset quality. Specific allowances were 20 basis points of loans, while SGD 20 million in general allowances were written back.
In line with its corporate social responsibility commitment, DBS set aside SGD 100 million from its profits to support vulnerable communities. Additionally, a special SGD 1,000 bonus was allocated to all staff, except senior managers, as a reward for their contributions. The Board proposed a final dividend of 60 cents per share for Q4, bringing the full-year dividend to SGD 2.22 per share, a 27% increase year-on-year.
Looking ahead, DBS plans to introduce a Capital Return dividend of 15 cents per share per quarter in FY2025, with similar payouts expected over the next two years. The normalized yield, including these payouts, is estimated at 6.7%, making DBS an attractive stock for investors. Lim & Tan Securities upgraded DBS to “Accumulate.”
Elite UK REIT: Stable Growth and Portfolio Expansion
Elite UK REIT (GBP 0.30, unchanged) reported a solid financial performance for FY2024. Distribution per unit (DPU) rose by 5.0% year-on-year to 2.87 pence, supported by a portfolio valuation increase to GBP 416.2 million, up 1.2% from December 2023. The REIT generated GBP 19 million in gross receipts from capital recycling, including divestments and dilapidation settlements. Notably, the valuation of Peel Park in Blackpool rose by 36% year-on-year to GBP 32.8 million.
The REIT secured 120 MVA of power supply for a planned hyperscale and AI-enabled data center at Peel Park, benefiting from its proximity to subsea cables and major infrastructure. Portfolio occupancy improved to 93.9%, with further increases expected post-divestments. The weighted average lease expiry stood at 3.3 years, providing stability through government-backed leases.
Cost optimization efforts, including interest rate hedges and sustainability-linked debt, led to a 2.3% increase in distributable income to GBP 18.5 million. Borrowing costs declined to 4.9%, with 86% of interest rate exposures hedged. The REIT’s net gearing ratio was 42.5%, and net asset value per unit was GBP 0.41.
Elite UK REIT continues to explore counter-cyclical investments, such as student housing and built-to-rent residential properties, while benefiting from advanced rental collection. With a dividend yield of 9.6% and a consensus target price of GBP 0.36, representing a 20% upside, the REIT remains a strong investment proposition.
Market Insights and Key Trends
Singapore Market Summary
The FSSTI Index closed at 3,861.4, up 0.8% for the day and 0.1% month-to-date. Notable performers included the HSI Index, which rose 1.2%, and the SHCOMP Index, which gained 1.0%. Daily market value stood at S\$1,265.6 million, with a volume of 1,249.4 million shares traded.
Commodities Overview
Gold prices rose by 0.3% to USD 2,869.0, achieving a year-to-date increase of 9.3%. Crude oil edged up 0.6% to USD 71.0, while crude palm oil climbed 2.3% to USD 4,504.0. The Baltic Dry Index surged by 2.8%, reflecting a 10.9% month-to-date gain.
Macro News
Key macroeconomic trends include China’s declining manufacturing activity, with the Caixin PMI dropping to 50.1 in January. In the US, Treasury yields are offering attractive risk premiums, with forecasts suggesting 10-year yields of 4.38% and two Fed rate cuts over the next 12 months.
Dividend Announcements
Several companies announced dividends, including Nam Lee Pressed Metal (1.5 cents final and 0.5 cents special), Parkway Life REIT (2.38 cents final), CapitaLand Ascendas REIT (7.681 cents final), and SGX (9 cents interim). Investors can look forward to payouts in the coming months.
Conclusion
The February 10, 2025 report by Lim & Tan Securities offers valuable insights into the financial performance and outlook of key companies like DBS Group and Elite UK REIT. With robust dividend yields, strategic growth initiatives, and sound financial metrics, these companies present compelling investment opportunities.
