I will further elaborate the details at a later date. This is a season of reporting, lots of companies to follow up on.
Some key findings after reading the financial statements and watching the AGM, I understand that the following:
- Oil and Gas sector has not hit the bottom yet. Tell me about it, I am from this sector. There are no major projects in the pipeline. Even if there is any, it will take at least six months for FEED study, tendering and clarification stage, then they will proceed to project execution. The earliest recovery will be in 2018, if not 2019. Hence, CEO Samuel mentions that his concern is on the demand side and there are a lot of supply in the shipyards. The capital will not return to this sector in the near future.
- OCBC has always been very prudent and price in their NPA accordingly whereas other two banks are seen to be converging towards this direction. In short, other two banks have no choice but start to recognize all the NPA. This is the key reason why I fancy this bank because of ownership by family members and they are very prudent in managing the business.
- Banks are moving towards HNWI, they will reduce their exposure to SME. For every $1 banks pump in, SG government can match dollar for dollar. MAS will step in to encourage banks to lend money to SME. This is how the economy will grow. This will be interesting
OCBC has increased quite a lot for NPA. OCBC is concerned with other sectors such retail which will deteriorate when the economy slows down. I feel SG is facing strong headwinds and we will experience a long winter. I believe SG government will use its reserve to stimulate the economy.
OCBC share price dropped from $9.75 to $9.3+… On hindsight, I was right but I can always sell at a later stage and save $6k.