OCBC will be releasing its full year financial
results on 17 February 2016. However, based on its 3Q results in October
last year, the Net Asset Value for each OCBC’s share was $7.78,
slightly above today’s closing price. It is still premature to assess
whether OCBC is an undervalued stock because the latest data has not
been released. But given the current weak market sentiments, the stock
price is expected to slide further.
SG Wealth Builder
The non-performing assets (NPAs) were S$1.93 billion
as at 30 September 2015, up 41% from S$1.37 billion a year ago. The
year-on-year increase in NPAs was largely attributed to the
classification of a few large corporate accounts associated with the oil
and gas services sector. Thus it is evident that the downturn in the
oil and gas services industry has a big impact on the bank. Given that
2016 has witnessed a massive correction in oil price, it is expected
that OCBC will be hit as well.
OCBC is one of my favorite stocks because of its long
history in Singapore and also the fact that the bank also owns Great
Eastern Holdings, the largest insurance group in Singapore and Malaysia
in terms of assets and market share. Its agency force in Singapore and
Malaysia is about 20,000-strong. This asset provides OCBC Bank with an
almost impenetrable investment moats because having Great Eastern as
it’s subsidiary allows more coordinated initiatives in sales management
and product development through bancassurance partnership.
In my view, it is unlikely that OCBC will trade at
the level of $4.14 again, even with the onslaught of a massive stock
market crashes. This is because the banking industry has evolved and
moved on from the previous crisis. Notwithstanding this, in the stock
market, never say never. Thus, my entry-level for OCBC will be $6.00 and
I will exit at $9.50.
The current bear market provides a window of
opportunities to buy blue chips at a reasonable level but investors
should make sure to diversify their portfolio to include hard assets
like bullion. Despite the massive declines across global stock markets,
gold prices has surged 4% since the start of 2016, thus cementing its
status as a tested insurance policy for investors’ portfolio. In
Singapore, you can purchase gold and silver from leading dealers like BullionStar, which offers bullion at competitive prices.
Join me in my investment journey and read my
financial adventures for free! Through the sharing, my vision is improve
and change people’s lives. In school, we don’t learn how to budget,
manage our finances, build wealth and invest our money. Instead, we are
taught useless subjects which we would never put to use most of the
times during our working lives.
Yet, managing our money is an important life skill
that is critical to our survival in the society. Many people start to
realize how it is importance of managing money only when they face the
prospect of financial ruins, by then which would be too late for
remedies. Thus, I started this blog to share articles on finances which I
aspire to make a positive impact in others’ lives.
Ref;http://sgwealthbuilder.com/2016/01/ocbc-bank-stock-price-crashed-to-six-year-low/
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