Previous Day Closing price: $8.39
Recommendation: Hold (maintained)
Target price: $10.10 (reduced from $10.60)
Yield: 2008 - 9.5%, 2009F - 4.2%
DBS posted a bottom line of $295m (-22% q-o-q; -40% y-o-y) including one-time charges from staff restructuring and impairment costs. Excluding one-time items, net profit was $383m in 4Q08, slightly below our expectations of $391m. The variance was mainly due to weaker than expected fee-based income. The board proposed a fourth-quarter dividend of 14 cents per share over the enlarged share base.
We have reduced our FY09 and FY10 earnings estimates by 15-20% to reflect higher provisions. Our target price is lowered to $10.10 based on FY09 BVPS (book value per share). The weak economic outlook and earnings uncertainties ahead will likely continue to depress share price. Maintain Hold.
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