DBS

DBS: CIMB downgrades to U/p(from O/p), after cutting CY11-13 estimates by 7% and TP to $11.90 (1.0x CY11 P/B; GGM, ROE 10.3%, COE 10%, growth 4.3%) from $16.56 (1.38x P/B). House wary of the new credit cycle and DBS’s exposure to China’s export sector.

Reckon that DBS has most room for top-line slippages, as capital-markets activity slow and i/r stay low. Comparing 1998 crisis with 2008 crisis, note that the banks’ ASEAN books looked well-behaved this time round and should likely to remain so in 2012. DBS, however, had potential China NPLs that were quickly nipped in the bud by China’s credit over-drive; this may come back to haunt it in 2012.

Also, DBS has benefitted from US$ trade finance activity and the RMB trade; such revstreams might also taper off ahead. While its 1.0x P/BV valuations might not sound expensive, experience with recessions show that valuation multiples can over-shoot on the downside. DBS has the most downside to trough valuations.