Following on from my previous portfolio update, I'll be commenting on some of the other stocks in my portfolio. I'll be focussing on OCBC solely for today, due to the amount of information I have to write on it.
1. OCBC Bank
- I currently am holding 2 lots of this bank stock, with some additional odd shares due to dividend reinvestment.
- For me a good portfolio should have some exposure to financials, as they represent the heartbeat of a robust economy. Businesses generally need cashflow and loans to function and this also spreads down to the common consumer like us be it in credit, investments or deposits.
- The thing I really like about OCBC is its healthy dividend yield and that I'm able to participate in the 'DRIP' program. For those who are unfamiliar with 'DRIP' it stands for Dividend Reinvestment Program, whereby you can elect to receive dividends in the form of shares. Much like how an 'accumulation' share class of a unit trust works. This program is really quite brilliant as I leverage on it to compound my portfolio returns effectively.
- What I also like about OCBC is its standing as a solid and safe bank, with good capital adequacy ratios. Its current P/E of 9.7 and P/B of just 1.23 represent fantastic value to me too. Its expansion in HK due to the Wing Hang acquisition looks to have been fully integrated into the business. NIM margins also are expected to be healthy due to the potential increase in US rates, most probably end of the year.
- There are some potential headwinds as well, most notably the general health of the global economy (Greek debt, potential Chinese A share bubble, amongst others). Also a slowdown in certain businesses such as loan issuances, higher defaults, etc pose some concern too. However, I do not expect these headwinds to pose significant or immediate threats to the business.
- In summary, I strongly feel that OCBC is pretty attractively valued at the current price of $10.03. Any price below $10 looks like a viable entry point. Again to me short term pricings should not matter as much but at the current price it does look prime for picking.
Alrighty, I've share my views on OCBC Bank which is one of the key holdings in my portfolio. What do you guys think?
Signing Off
Transitioning Stock Investor
PE wise maybe u should strip off 1 time gains
ReplyDeletefor OCBC I use a conservative EPS of 90 cents per share, which is PE 11.2 or so
Makes sense to strip off One time gains to get another perspective. 11.2 PE still looks aint too shabby :)
ReplyDeleteHi nice reading your ppost
ReplyDelete