Q&ACategory: Dividend StocksCiti Downgrades DBS With A Sell Call • Target Price $26.60
Vivienne asked 11 months ago
Hello Rusmin,  Happy Saturday! I finally started reading The Edge. Thank you for recommending good things to us! 

I'm curious what your thoughts are on the Jun 10th piece by Felicia Tan about Citi's downgrade, when elsewhere, I seem to reading positive coverage about the banks in general -- they're still riding on the tailwinds of higher interest rates (the Fed is not done with it yet, despite this month's pause).  I wasn't sure why there was a restriction on Tan Yong Hong's writings:  "Citi Research analyst Tan Yong Hong has resumed coverage on DBS Group Bank D05 0.00% after a period of restriction since January." I recall well Victor's advice in your roundtable discussion two, three months ago: he cautioned against DBS and UOB on account of their higher valuation compared to OCBC. If Tan Yong Hong's viewpoint is right, that would give me a chance at owning DBS. Honestly, though, I find some of these price targets a little incredulous. I wonder what you think? 

Bon weekend!

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1 Answers
Victor Chng Staff answered 11 months ago
Hi Vivienne,   When it comes to reading articles or analyst reports, we tend to avoid looking at the analyst's target price. At the end of the day, we want to do our valuation and determine ourselves. To determine that, you have to value DBS based on their 10-year average book value and look at the current dividend yield compared to historical.   Looking at the target price of $26.60, you can compare it with the dividend and the book value to see if it is reasonable. I will say the price target is a fair valuation for DBS as the current price is slightly over fair value.