CGS International May 9, 2025

Trendspotter: DBS Group’s Uptrend Gains Momentum Amidst Confident Outlook

Overnight Market Recap: Risk-On Sentiment Prevails

Wall Street experienced a prevailing risk-on mood on Thursday. Stocks rose and bonds fell following announcements from Donald Trump regarding a trade deal with the UK and potential tariff reductions with China if talks progress well. Equities were further boosted by the president’s suggestion that investors should buy shares now. This sentiment, driven by hopes for easing trade tensions, helped the S&P 500 briefly surpass its April 2 high before paring gains. Economically-sensitive sectors led the advance, while Bitcoin saw a significant surge, surpassing \$100,000. As the safety bid diminished, gold and haven currencies declined, and Treasury yields increased as traders reduced expectations for interest rate cuts.

Trump hailed the UK trade framework as a historic achievement and a first step in overhauling the global economy. Ahead of talks with China, he expressed belief in tangible progress. Market participants like Matt Maley at Miller Tabak + Co. noted that details on the UK deal and progress with China would provide crucial clarity on the trade issue’s future impact on the US and global economy. Trump also linked promising trade news with Republican efforts to extend and expand tax cuts as reasons for investor optimism.

Major US indices closed higher: the S&P 500 rose 0.6%, the Nasdaq 100 gained 1%, the Dow Jones Industrial Average added 0.6%, and the Russell 2000 climbed 1.8%.

SIN: DBS Group Holdings Ltd – Confident Guidance Amidst Uncertain Outlook

DBS Group Holdings Ltd recently held an analyst briefing on the morning of May 8, 2025. During this briefing, DBS reaffirmed its guidance for Financial Year 2025 Forecast (FY25F), expecting flat year-on-year Profit Before Tax (PBT) despite rising global economic uncertainty.

Management also highlighted the strength of its provisions. The management overlay of approximately S\$2.6 billion out of a total of S\$4.16 billion in General Provisions (GPs) as of the end of the first quarter of 2025 (1Q25) is considered ample to address potential stress scenarios.

Furthermore, DBS’s excess capital, standing at approximately S\$7.73 billion as of 1Q25, is viewed as sufficient to support a more extensive and sustainable capital return policy between FY25-27F.

DBS Group Holdings Ltd – Technical Buy Signal

The analysis indicates a technical buy signal for DBS Group Holdings Ltd, with the uptrend slowly regaining strength. The last recorded price was 43.09.

Previously, a sell call was issued on DBS on April 7, 2025, which reached its third target price of S\$37.59 on the same day. Following this, the stock entered a strong buying mode and has since shown a steady rebound. A re-initiation of a buy call is being made with potential entry points.

Key Technical Observations:

• DBS has returned above the secondary uptrend line (highlighted in green in the original chart) and rebounded above the S\$38.00 psychological level, which marks a strong hallmark of a bear trap.
• The major trend for DBS since 2020 remains intact.
• The previous bearish gap has been filled.
• The Ichimoku cloud indicator shows a bullish crossover between the conversion and base lines, and the leading spans A and B have also performed a bullish crossover.
• The Stochastic oscillator has moved above the 50-midpoint level and is trending upwards.
• The 23-period Rate of Change (ROC) is steadily rising from the bottom towards the zero line.
• Volume has increased above the 20-period average, indicating healthy expansion supporting the price movement.
• The DM+ of the directional movement index is above the 25-level, validating the strength of the bullish trend.

Technical Levels:

Recommendation: Upgrade to Add

Based on the confluence of fundamental strength and positive technical indicators, the recommendation for DBS Group Holdings Ltd is upgraded to Add. A higher target price of S\$47.90 is assigned. This upgrade is driven by the view that DBS’s capital return initiative will improve yield attractiveness while also lifting its long-term Return on Equity (ROE).

Description of the Company

DBS Group Holdings Limited and its subsidiaries provide a variety of financial services. The Company offers services including mortgage financing, lease and hire purchase financing, nominee and trustee, funds management, corporate advisory, and brokerage. DBS Group also acts as the primary dealer in Singapore government securities.

Analyst Information

Prepared by:

CHUA Wei Ren, CMT

T (65) 6210 8612

E weiren.chua@cgsi.com

Important Disclosures and Recommendation Framework

This report contains important disclosures and is subject to various restrictions on distribution depending on the jurisdiction. The information is prepared from data believed to be correct and reliable at the time of issue, but accuracy, completeness, and reliability are not guaranteed. Estimates, projections, forecasts, and opinions are based on assumptions considered reasonable as of the document date but are not guarantees of future events. Past performance is not indicative of future results, and investments carry risk, including the potential to lose more than the initial investment.

CGS International, its affiliates, and employees may own positions in the securities covered and may seek or perform investment banking or other services for these companies. The analyst certifies that the views expressed reflect personal opinions independently prepared, and compensation is not directly related to specific recommendations or views.

Recommendation Definitions:

• Add: Stock’s total return expected to exceed 10% over the next 12 months.
• Hold: Stock’s total return expected to be between 0% and positive 10% over the next 12 months.
• Reduce: Stock’s total return expected to fall below 0% or more over the next 12 months.

Total expected return includes the percentage difference between the target price and current price, plus forward net dividend yields. Stock price targets have a 12-month horizon.

Sector and Country Ratings Definitions:

• Overweight: Stocks in the sector/country have a positive absolute recommendation/investors should be positioned with an above-market weight.
• Neutral: Stocks in the sector/country have a neutral absolute recommendation/investors should be positioned with a neutral weight.
• Underweight: Stocks in the sector/country have a negative absolute recommendation/investors should be positioned with a below-market weight.

Rating Distribution (Quarter ended March 31, 2025, 551 companies under coverage):

Investors are strongly advised to conduct their own independent evaluation and consult professional financial advisers before making investment decisions.