My Portfolio

Sunday, May 29, 2016

Which Bank to Buy?

Interest rates hike is imminent. Even though school taught us that past events cannot assist us to generate an abnormal risk-adjusted return.. well... I can argue this is not abnormal. Just about everyone is preying on the banks now, the sooner i go in, the better?

Anyway, i'll focus on the financials instead of the company's fundamental.

P/E ratio: 9.42
Div Yield:  4.21
ROE: 12.16
FCF: Falling over last 3 years. Back up this quarter (0.26)
Dividends: 0.34 to 0.36 past 3 years. Expected to be 0.36. Increasing steadily since 2006.

P/E ratio: 8.92
Div Yield: 3.86
ROE: 11.34
FCF: Falling over last 3 years. Sudden sharp jump this quarter (2.56)
Dividends: Fell from 2006 and remain stable since 2009 at 0.6.

P/E ratio: 9.54
Div Yield: 3.84
ROE: 10.58
FCF: Volatile over 3 years but stayed positive. Recent quarter (0.01)
Dividends: Increased (stably) since 2006 to 0.7. Last year sudden increase to 1.1

OCBC scored the highest for 2/3 of my chosen metric.
DBS is cheap in terms of P/E ratio.
UOB only positive note is its stability.

As i'm looking at banks for growth rather than dividends, my dividend floor of 5% will be lifted when analysing whether to buy these stocks.

I think i would be looking at DBS and OCBC at the mean time. It seems like a good time to buy them. Probably 50-50 weight. (But DBS is so expensive). It should form 5% of my portfolio.

OCBC (O39) Target: 8.45
DBS (D05) Target: 15.30

Seems like I will unlikely get them. Lets see!

Also looking at Global ETFs. Targeting IWDA (LSE) at 40.50; EIMI (LSE) at 20

I admit that i have been a little aggressive in expanding my portfolio. That's why my target price is so far below the current. Got to rein in my impulse.