Oversea-Chinese Banking (SGX:O39) - Share price, News & Analysis

Q: What is the Fair Price of O39 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

O39 (SGD11.36) is trading below our estimate of [[fair value]] (SGD24.09)

O39 fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	4/6
Financial Health	5/6
Dividends	4/6

O39 Stock Overview

Oversea-Chinese Banking Corporation Limited provides financial services in Singapore, Malaysia, Indonesia, Greater China, rest of the Asia Pacific, and internationally.

Rewards

Trading at 52.8% below our estimate of its fair value

Earnings are forecast to grow 11.64% per year

Earnings have grown 3.5% per year over the past 5 years

Risk Analysis

Unstable dividend track record

Oversea-Chinese Banking Competitors

United Overseas Bank

SGX:U11

S$44.6b

DBS Group Holdings

SGX:D05

S$77.4b

ING Groep

ENXTAM:INGA

€34.3b

Shanghai Pudong Development Bank

SHSE:600000

CN¥234.2b

Price History & Performance

Summary of all time highs, changes and price drops for Oversea-Chinese Banking
Historical stock prices
Current Share Price	S$11.36
52 Week High	S$13.54
52 Week Low	S$10.98
Beta	0.85
1 Month Change	-4.22%
3 Month Change	-7.87%
1 Year Change	-6.89%
3 Year Change	-0.35%
5 Year Change	5.28%
Change since IPO	275.27%

Recent News & Updates

Apr 07

Oversea-Chinese Banking (SGX:O39) Is Increasing Its Dividend To S$0.28

Oversea-Chinese Banking Corporation Limited's ( SGX:O39 ) dividend will be increasing to S$0.28 on 20th of May. The...

Shareholder Returns

	O39	SG Banks	SG Market
7D	-0.9%	-1.3%	-0.8%
1Y	-6.9%	-0.6%	-4.0%

Return vs Industry: O39 underperformed the SG Banks industry which returned -0.6% over the past year.

Return vs Market: O39 underperformed the SG Market which returned -4% over the past year.

Price Volatility

Is O39's price volatile compared to industry and market?
O39 volatility
O39 Average Weekly Movement	2.2%
Banks Industry Average Movement	3.9%
Market Average Movement	4.9%
10% most volatile stocks in SG Market	11.1%
10% least volatile stocks in SG Market	2.2%

Stable Share Price: O39 is less volatile than 75% of SG stocks over the past 3 months, typically moving +/- 2% a week.

Volatility Over Time: O39's weekly volatility (2%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1912	30,809	Helen Wong	https://www.ocbc.com

Oversea-Chinese Banking Corporation Limited provides financial services in Singapore, Malaysia, Indonesia, Greater China, rest of the Asia Pacific, and internationally. The company's Global Consumer/Private Banking segment provides products and services to individual customers, including checking accounts, and savings and fixed deposits; housing and other personal loans; credit cards; wealth management products consisting of unit trusts, banc assurance products, and structured deposits; and brokerage services. This segment also offers investment advice and portfolio management, estate and trust planning, and wealth structuring services for high-net-worth individuals.

Oversea-Chinese Banking Fundamentals Summary

How do Oversea-Chinese Banking's earnings and revenue compare to its market cap?
O39 fundamental statistics
Market Cap	S$51.06b
Earnings (TTM)	S$4.67b
Revenue (TTM)	S$9.57b

10.9x

P/E Ratio

1.0x

P/B Ratio

Is O39 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
O39 income statement (TTM)
Revenue	S$9.57b
Cost of Revenue	S$145.00m
Gross Profit	S$9.42b
Other Expenses	S$4.76b
Earnings	S$4.67b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 03, 2022

Earnings per share (EPS)	1.04
Gross Margin	98.48%
Net Profit Margin	48.77%
Debt/Equity Ratio	54.1%

How did O39 perform over the long term?

See historical performance and comparison

Dividends

4.9%

Current Dividend Yield

51%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is O39 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for O39?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for O39. This is calculated by dividing O39's market cap by their current preferred multiple.
What is O39's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	S$51.06b

O39 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	0.9x

Price to Earnings Ratio vs Peers

How does O39's PE Ratio compare to its peers?

O39 PE Ratio vs Peers

The above table shows the PE ratio for O39 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	9.2x
U11 United Overseas Bank	11.4x	13.5%	S$44.6b
D05 DBS Group Holdings	11.9x	13.2%	S$77.4b
INGA ING Groep	8.2x	12.3%	€34.3b
600000 Shanghai Pudong Development Bank	4.9x	6.0%	CN¥234.2b
O39 Oversea-Chinese Banking	10.9x	11.6%	S$51.1b

Forward PE

Price-To-Earnings vs Peers: O39 is expensive based on its Price-To-Earnings Ratio (10.9x) compared to the peer average (9.2x).

Price to Earnings Ratio vs Industry

How does O39's PE Ratio compare vs other companies in the Asian Banks Industry?

Price-To-Earnings vs Industry: O39 is expensive based on its Price-To-Earnings Ratio (10.9x) compared to the Asian Banks industry average (8.7x)

Price to Earnings Ratio vs Fair Ratio

What is O39's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

O39 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	10.9x
Fair PE Ratio	14.4x

Price-To-Earnings vs Fair Ratio: O39 is good value based on its Price-To-Earnings Ratio (10.9x) compared to the estimated Fair Price-To-Earnings Ratio (14.4x).

Share Price vs Fair Value

What is the Fair Price of O39 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: O39 (SGD11.36) is trading below our estimate of fair value (SGD24.09)

Significantly Below Fair Value: O39 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: O39 is good value based on its PEG Ratio (0.9x)

Discover undervalued companies

Future Growth

How is Oversea-Chinese Banking forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

11.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: O39's forecast earnings growth (11.6% per year) is above the savings rate (1.8%).

Earnings vs Market: O39's earnings (11.6% per year) are forecast to grow slower than the SG market (12.6% per year).

High Growth Earnings: O39's earnings are forecast to grow, but not significantly.

Revenue vs Market: O39's revenue (9.5% per year) is forecast to grow faster than the SG market (7.8% per year).

High Growth Revenue: O39's revenue (9.5% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: O39's Return on Equity is forecast to be low in 3 years time (11.1%).

Discover growth companies

Past Performance

How has Oversea-Chinese Banking performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

3.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: O39 has high quality earnings.

Growing Profit Margin: O39's current net profit margins (48.8%) are higher than last year (48.1%).

Past Earnings Growth Analysis

Earnings Trend: O39's earnings have grown by 3.5% per year over the past 5 years.

Accelerating Growth: O39's earnings growth over the past year (7.6%) exceeds its 5-year average (3.5% per year).

Earnings vs Industry: O39 earnings growth over the past year (7.6%) underperformed the Banks industry 24.2%.

Return on Equity

High ROE: O39's Return on Equity (9%) is considered low.

Discover strong past performing companies

Financial Health

How is Oversea-Chinese Banking's financial position? (This company is analysed differently as a bank or financial institution)

Financial Health Score

5/6

Financial Health Score 5/6

Asset Level
Allowance for Bad Loans
Low Risk Liabilities
Loan Level
Low Risk Deposits
Level of Bad Loans

Financial Position Analysis

Debt to Equity History and Analysis

Balance Sheet

Financial Institutions Analysis

Asset Level: O39's Assets to Equity ratio (10x) is low.

Allowance for Bad Loans: O39 has a low allowance for bad loans (81%).

Low Risk Liabilities: 72% of O39's liabilities are made up of primarily low risk sources of funding.

Loan Level: O39 has an appropriate level of Loans to Assets ratio (53%).

Low Risk Deposits: O39's Loans to Deposits ratio (82%) is appropriate.

Level of Bad Loans: O39 has an appropriate level of bad loans (1.5%).

Discover healthy companies

Dividend

What is Oversea-Chinese Banking current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

4.93%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: O39's dividend (4.93%) is higher than the bottom 25% of dividend payers in the SG market (2.24%).

High Dividend: O39's dividend (4.93%) is low compared to the top 25% of dividend payers in the SG market (6.13%).

Stability and Growth of Payments

Stable Dividend: O39's dividend payments have been volatile in the past 10 years.

Growing Dividend: O39's dividend payments have increased over the past 10 years.

Current Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (51%), O39's dividend payments are covered by earnings.

Future Payout to Shareholders

Future Dividend Coverage: O39's dividends in 3 years are forecast to be well covered by earnings (47% payout ratio).

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

10.4yrs

Average management tenure

CEO

Helen Wong (61 yo)

1.25yrs

Tenure

S$7,631,335

Compensation

Ms. Pik Kuen Wong, also known as Helen, has been Non-Executive Director at OCBC Wing Hang Bank Limited since June 1, 2021. She serves as Non-Executive Non-Independent Director at Great Eastern General Insu...

CEO Compensation Analysis

Compensation vs Market: Helen's total compensation ($USD5.47M) is about average for companies of similar size in the SG market ($USD5.21M).

Compensation vs Earnings: Insufficient data to compare Helen's compensation with company performance.

Leadership Team

Experienced Management: O39's management team is seasoned and experienced (10.4 years average tenure).

Board Members

Experienced Board: O39's board of directors are considered experienced (7.5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/07/05 00:00
End of Day Share Price	2022/07/05 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31