DBS

DBS: Deutsche raises TP to $18 from $17.20, reiterates Buy for the structural upside to fee income and a free option on the cyclical.
Says DBS’ long term fee performance relative to peers has been poor, but reflects a historical lack of mgt discipline with the bank’s capital. Believes the new CEO brings a greater focus on execution and the fee shortfall could be easily addressed, delivering ROE upside of 110-150 bps, leading to 20% valuation upside.
Adds, in a blue-sky scenario of interest rate normalization, a repeat of the last tightening cycle would see DBS with an ROE >16% in 3 yrs time, which suggests a P/B valuation multiple of 2x, which implies a price of >$30/sh by end 2014.

Stock could be a potential break out candidate, having gapped up this morning to open above the $15 resistance. RSI is above neutral, and rising positively along with MACD and Stochastics.