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singaporegal
Supreme |
28-Aug-2007 11:55
Yells: "Female TA nut" |
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Bank stocks are falling today. |
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Pinnacle
Master |
28-Aug-2007 10:33
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DBS has one of the highest CDO exposures amongst Asia-ex Japan FinancialsDBS reported that they have total investments in CDOs/CLOs amounting to US$850mn (cS$1.3bn), with rating profile of 15% in AAA, 30% in AA and 55% in A. Of these, 22% or US$188mn (c.S$284mn) are invested in ABS CDOs which have some exposure to US subprime mortgages. In addition, DBS had sold US$1.7bn of structured products involving CDOs to third-party investors, none of which are exposed to the US sub-prime mortgages. Included in these is a S$1.4bn asset backed commercial paper (ABCP) program, named Red Orchid Structured Asset (ROSA), that has S$1.1bn worth of CDOs (98% AAA-rated and 2% AA-rated), most of which are corporate CDOs. DBS is the liquidity provider for this ABCP, implying that there is a risk that DBS could be forced to assume the underlying investments should it fail to refinance through the commercial paper market. All in all, we estimate that DBS could have a maximum CDO exposure of US$2.73bn (S$4.1bn) or 20% of its equity based on the above disclosure, in the event that it is required to fund and absorb the structured products sold. This is one of the highest exposures among the Asia ex-Japan financials. MBS/CDO a slow-motion, long-tailed problemAs our GS analyst, Roy Ramos, stated in the report, ?Subprime/CDO: what's involved, what problems may still lurk ahead? published on August 17, 2007, we believe that as a result of direct exposure of Asian banks like DBS, a one-time MTM/provision hit may be unavoidable with further lingering uncertainty over (a) magnitude of exposures, (b) likely losses and (c) broader macro and banking sector knock-on impact. DBS? potential CDO-related losses ? S$156mn in 2H07DBS is the only Singapore bank yet to make any CDO-related provisions. Using UOB?s provision experience as a benchmark (54% of ABS CDO, which we believe assumed loss ratios of 100% for BBB-rated and below securities and 65% for A-rated securities), we expect DBS to take a S$156mn provisioning hit in 2H07, which is 55% of their direct ABS CDO exposure of S$284mn. Note that this is at best an estimate, as it is difficult to ascertain the ultimate losses, which depend on the structure and terms and conditions of the specific CDOs, such as the underlying asset composition and quality, credit rating, level of subordination, etc. In addition, we understand that DBS has all along classified its CDO exposure as loans, not investment securities. This is a departure from UOB and OCBC, and could add further uncertainty to the extent and timing of DBS making any CDO related provisions. This is because under its accounting classification, DBS has greater discretion in measuring and recognizing the impairment charge due to credit risk, which could be lower than the market risk implied by current mark-to-market exercises on CDOs as investment securities. In other words, the CDO overhang could be even more extended in the case of DBS, should the management decide to defer any CDO-related provisioning until there is further clarity in the credit market. |
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Pinnacle
Master |
28-Aug-2007 10:24
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Goldman SachsWe remove DBS from our Conviction Buy list & downgrade it to Neutral, as we see no visible NT catalysts to mitigate its CDO exposure overhang. While we believe DBS? strong fundamentals remain largely intact & recent share price correction a tad overdone (its mkt cap reduction since 20 July was 4X its direct CDO exposure of S$1.3bn), CDO/US subprime problem will likely be a slow-motion, long-tailed headwind with worse-thanexpected ultimate losses, in our view. Stock was +18% since we upgraded to Buy on Apr 24, ?06 vs STI?s +30%, but -13.6% since we added it to our CBL on May 7, ?07 vs STI?s -3.1%. Last 12m: stock was +15%, index +38%. |
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Pinnacle
Master |
27-Aug-2007 16:15
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DBS / S$20.60 / HOLD (BUY below S$19.50) The Straits Times reported that DBS has confirmed its exposure to the US sub-prime mortgage crisis is about S$2.4b. Two weeks ago, DBS stated that its exposure to collateralised debt obligations (CDOs) was US$850m (S$1.3b). DBS also stated then that it had distributed US$1.7b of structured products involving CDOs to institutional and private banking investors. But it was recently reported that DBS had direct exposure to S$1.1b worth of CDOs via a special investment vehicle called Red Orchid. This vehicle holds commercial paper - a type of corporate debt usually due in nine months or less - which is invested in CDOs. DBS has clarified that the S$1.1b of CDOs in Red Orchid has been included in the US$1.7b that DBS cited earlier. Our HOLD call on DBS is maintained.
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Pinnacle
Master |
24-Aug-2007 14:10
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Bank of China, DBS skid on bigger subprime exposure HONG KONG, Aug 24 (Reuters) - Three of Asia's biggest banks, including state-run giant Bank of China <3988.HK>, revealed bigger-than-expected exposure to the U.S. subprime mortgage crisis, sending their shares skidding on Friday. The news prompted fears that Asian banks, although domestically focused and risk averse after the Asia financial crisis, were not as immune as investors had hoped from the subprime meltdown. Bank of China and its BOC Hong Kong <2388.HK> arm reported a combined $11.25 billion in subprime-related holdings late on Thursday, while Singapore's DBS Holdings Group Holdings "The market, including us, was surprised to see Bank of China has big exposure to U.S. subprime-related securities," said analyst Samuel Chen of JPMorgan, which cut its rating on the lender to underweight from overweight. Bank of China shares extended opening losses and were down 6.1 percent at HK$3.84, while BOC Hong Kong slid 4.2 percent to HK$18.74. The Hang Seng Index <.HSI> was 0.79 percent lower. UBS and Morgan Stanley cut their ratings on BOC Hong Kong, the city's No. 2 lender, citing subprime concerns. State-run Industrial and Commercial Bank of China <1398.HK> <601398.SS>, the world's largest lender by market value, said it holds US$1.23 billion in mortgage-backed securities, accounting for 4.32 percent of its foreign exchange investment portfolio. The Beijing-based bank said it had incurred no loss on the portfolio, which accounts for 0.0012 percent of its total assets. ICBC shares fell as much as 2.4 percent before paring losses. State-controlled Bank of China <601988.SS> said late on Thursday that it held US$8.965 billion in U.S. subprime mortgage-backed bonds and US$682 million in CDOs at the end of June. Bank of China, which posted a forecast-beating 52 percent rise in first-half net profit, said it had set aside provisions of 388 million yuan (US$51.3 million) and 758 million yuan, respectively, to account for potential losses. JPMorgan's Chen said that while the bulk of Bank of China's subprime-related holdings had the highest credit rating, he expected the bank's impairment loss ratio on the holdings to increase in the second half of this year. CONTAINED? Some Bank of China watchers said the lender's subprime exposure was contained and manageable. "Don't panic," Citigroup analyst Tracy Yu wrote in a research note, saying that while the size of Bank of China's exposure to subprime-related asset-backed securities (ABS) and CDOs was "sizeable", the potential loss based on provisions set aside by the bank was not significant. Binay Chandgothia, chief investment officer for the Hong Kong operation of Principal Asset Management, which holds Bank of China shares, said the bank's subprime exposure was probably the largest among China's banks. "It's more of a one-time event if you ask me. You look at the big banks, ICBC is a pretty small number. Bank of China is the big number," he said. "We don't think China Construction Bank <0939.HK> (CCB) and the other banks like China Merchants <3968.HK> have a lot of foreign assets anyway," added Chandgothia. "With Bank of China, we were anticipating some kind of exposure which was larger than what the market was thinking." Shares in DBS, Southeast Asia's largest bank, which confirmed the CDO exposure figure cited in a CLSA analyst report, fell 2.4 percent on Friday morning. (For a factbox on Asian firms' exposure to the subprime crisis, click [ID:nHKG166060]) Bank of China's subprime bonds account for 3.51 percent of Bank of China's securities portfolio, while the CDOs account for 0.27 percent of the total. Morgan Stanley and UBS on Friday downgraded BOC Hong Kong by one notch to equal-weight and neutral, respectively, saying the stock was likely to be weighed down by its subprime exposure. BOC Hong Kong disclosed it has US$1.6 billion invested in sub-prime mortgage related asset-backed securities, Morgan Stanley said. "We expect some losses ahead," it said. The five-year credit default swap for the Bank of China -- insurance-like contracts that protect against defaults and restructuring -- was calmer after having touched a high of 70 basis points (bps) on Thursday just after the announcement. "Now it's a bit more calm at 55/65 bps," a Hong Kong-based trader said. |
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Pinnacle
Master |
24-Aug-2007 13:29
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Reports are for reference... not a bible. |
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Centaur
Veteran |
24-Aug-2007 13:17
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i agree, thats why need to verify analyst reports with other sources and do yr homework too. But i've personally come across some good analyst reports as well. If can buy and make money solely based on analyst reports, the analyst would have become billionaires and all of us here millionaires |
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DnApeh
Master |
24-Aug-2007 12:59
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Durian seller always say their durians very good one. Got worm still say good. "Very good durian, that's why the worm also like mah." |
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popdod
Member |
24-Aug-2007 12:49
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I never trust the analysts fully. They always send you aeroplane to holland one. They had to say positive to reassure investors' confidence. 
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knightrider
Elite |
24-Aug-2007 11:56
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See this one, like this also can, At 1st say one thing, now say more are exposed. They are Big, what can you do ! 4 your own reading. Good Luck. 11:15 24Aug2007 RTRS-SINGAPORE'S DBS SAYS HAS MORE DIRECT CDO EXPOSURE THAN PREVIOUSLY THOUGHT BUT "COMFORTABLE" WITH IT 11:19 24Aug2007 RTRS-Singapore's DBS says has more direct CDO exposure SINGAPORE, Aug 24 (Reuters) - DBS Group Holdings <DBSM.SI>, Southeast Asia's biggest bank, said on Friday that it has more direct exposure to collateralised debt obligations than previously declared, but that it is comfortable with the holding. "We are comfortable with our exposure to the conduit," a DBS spokeswoman said. Broker CLSA said in a report that while Singapore banks have limited exposure to collateralised debt obligations, DBS may have S$2.4 billion ($1.6 billion) worth of CDO holdings -- nearly double the S$1.3 billion direct exposure it initially declared. It said that DBS may have more direct exposure to the CDO market through a special purpose vehicle that had commercial paper backed by S$1.1 billion worth of CDOs, with the paper due for renewal. The DBS spokeswoman confirmed the figures cited in CLSA's report. ((Reporting by Saeed Azhar, editing by Jan Dahinten; saeed.azhar@reuters.com; Reuters Messaging: saeed.azhar.reuters.com@reuters.net; +65 6403-5664)) |
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Centaur
Veteran |
24-Aug-2007 10:57
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All analysts remained positive on local banks' profits in the longer term due to Singapore?s resilient domestic economy but have trimmed earnings for 2H07 due to the current worldwide credit turmoil (Table 1).
Summary of Major Brokerage House Reports on Local Banks from 06/08/07 ? 22/08/07 Credit Credit Suisse (20/08) - Expect return to normalcy & healthy ROEs next year. - Against strong economic growth in Asia, accelerating loan growth, stable margins and rising employment/income prospects, profits remain positive. Merrill Lynch (22/08)
JP Morgan (20/08) - Fundamentally positive on local banks with quarterly downward impact on banks ranging from 21% - 57% on 2H07 pre-tax profit. - Book values could decline by 3-5% on losses to Trading, Available for Sale & CDO portfolio. Macquarie (07/08) - Local Banks remain attractive on valuation. Sell-down from CDO fallout overblown. - Estimated write-offs limited to 10-20% at worst and thus impact on book value muted, at 0.2-3.0%. UBS (06/08) - CDO exposure not large and any impact on 2007 earnings from write-offs could range from only 3.6-11.8%. - Earnings expected to grow by 17% in 2007 & 14% in 2008 on back of double digit loan growth & improving margins. Fitch (22/08) - Exposures of most of its rated Asia-Pacific banks to direct US subprime exposures are low, generally amounting to just a few percent of the investing bank's equity capital. - Losses on such investments will put a dent in annual earnings but do not pose a systemic risk as they are not a serious threat to the soundness of the banks - The Singaporean banks have been the most transparent in Asia Moody?s (06/08) - Financial impact should be manageable for Asian banks such that challenges can be accommodated within current rating exposure. - No re-ratings on Asia?s banks or securities firms but cautions that further contagion within credit markets or into the US or other economies likely to have adverse impact on financial institutions and ratings. |
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Pinnacle
Master |
24-Aug-2007 09:44
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Dutch bank ING is set to replace Singapore's DBS Group as the second-largest shareholder in TMB Bank, Thai media reported yesterday. ING, which has for several years been looking to acquire a Thai banking asset, has agreed to buy a 24.9 per cent stake in TMB, Thailand's sixth-largest commercial bank in terms of asset size, according to a Khao Hun news report. The report helped push the share price of TMB higher as investors have become more optimistic about the nearly US$1 billion of recapitalisation at the bank, which is seeking to clear up its bad loans ahead of stricter Bank of Thailand rules coming in next year. Khao Hun, which cited sources in the Ministry of Finance, said that on Aug 17, senior management of TMB took representatives of ING to meet Finance Minister Chalongphob Sussangkarn, introducing them as potential shareholders. The paper said that ING's planned 24.9 per cent share in TMB would make it a bigger shareholder than Singapore's DBS, which currently holds 16 per cent and is the second-largest shareholder after the Ministry of Finance itself, which has 31 per cent. TMB has been trying to raise close to 35 billion baht (S$1.65 billion) in new capital to meet its bad loan provisioning requirements - but DBS is said to want a change in management before it would inject more funds. Reports have suggested that DBS, Singapore's biggest bank, said that it was reviewing whether to take part in the recapitalisation plan.
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Pinnacle
Master |
30-Jul-2007 09:14
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Philip Securities maintained BUY call on DBS despite falling interest rates in Singapore and impairment charge of S$159m this quarter in Thailand. Earning estimate for 2007 and 2008 is increased to S$2.6b and S$2.9b respectively due to the construction activities and property sec. This increased DBS?s target price to S$25.40, 1.80x FY08 NAV based on Gordon growth model. However, overall market sentiments may weigh down the stock price despite optimistic outlook. DBS declared a quarterly dividend of 20 cents per share, similar to the previous quarter. |
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