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Fundamental View
AS OF 11 Mar 2025DBS Group has sound standalone fundamentals and benefits from its strong home country. Support may be stronger than peers thanks to its longstanding relationship with the government and Temasek’s ~29% stake.
DBS is a major player in Asian corporate banking, and also has strengths in mass market and private banking. It is also one of Asia’s leading digital banks. Acquisitions have been skillfully handled in the past decade or so.
DBS has performed well in recent years, with a high RoE, and its asset quality has been more resilient than that at UOB and OCBC.
Business Description
AS OF 11 Mar 2025- DBS was established in 1968 as a development bank but was subsequently privatised and is now commercially run. The Singapore government retains an indirect stake through its investment vehicle, Temasek (~29%).
- In 1998, DBS moved beyond its wholesale bank origins with the acquisition of POSB that brought along a large mass market customer and deposit base. In 2001, it acquired the former Dao Heng Bank in Hong Kong and in 2008, it acquired a part of the failed Bowa Bank in Taiwan, to supplement its Greater China operations. It also regularly acquired wealth management businesses, such as SocGen's Asian private banking business in 2014 and ANZ's Asian retail and wealth management businesses in Singapore, Hong Kong, China, Taiwan and Indonesia in 2018. Recent acquisitions include Lakshmi Vilas Bank in India, a 16.69% stake in China's Shenzhen Rural Commercial Bank, and Citi's consumer business in Taiwan. The bank is also reportedly considering expanding into Malaysia by purchasing Temasek's 29.1% stake in Alliance Bank Malaysia Bhd.
- As of YE24, Singapore accounted for 45% of its loan book, with HK (14%), Rest of Greater China (13%), South & Southeast Asia (8%) and Rest of the World (19%) accounting for the rest.
- The bank is well regarded as a digital leader in the banking space, and has steadily built capabilities in private banking and markets businesses.
Risk & Catalysts
AS OF 11 Mar 2025Loan growth has been a recent challenge, with continued high repayments in Greater China.
Asset quality has outperformed the other two Singapore majors with very low credit costs. Management expects a slight increase in specific provisions by a few bp in FY25.
The bank encountered some operational issues recently. On 30 April 2024, the MAS removed its restriction on DBS’s non-essential activities, which had been imposed in Nov-23 following IT failures. Its retail payments system had another outage on 2 May 2024.
Non-interest income performance was very strong in FY24, establishing a high baseline for FY25.
Key Metric
AS OF 11 Mar 2025| SGD mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 1.37% | 1.14% | 1.32% | 1.60% | 1.69% |
| ROA | 0.8% | 1.0% | 1.1% | 1.4% | 1.5% |
| ROE | 9.1% | 12.5% | 15.0% | 18.0% | 18.0% |
| Equity/Assets | 8.40% | 8.38% | 7.65% | 8.40% | 8.32% |
| CET1 Ratio (fully loaded) | 13.9% | 14.4% | 14.6% | 14.6% | 15.1% |
| NPL Ratio | 1.60% | 1.27% | 1.13% | 1.11% | 1.09% |
| Provisions / Loans | 0.83% | 0.01% | 0.06% | 0.14% | 0.14% |
| Liquidity Coverage Ratio | 139% | 135% | 146% | 144% | 147% |
| Net Stable Funding Ratio | 125% | 123% | 117% | 118% | 115% |
CreditSight View Comment
AS OF 09 May 2025DBS performed well for several years under CEO Piyush Gupta, who was succeeded by Ms. Tan Su Shan in March 2025. It has comfortable capital and well managed liquidity. Temasek is the main shareholder. DBS has grown its various businesses sensibly and has been a leading bank for adopting digital technology, recent technology outages notwithstanding. It has also steadily grown its fee income and its regional businesses. WM and transaction banking have been focuses, with bolt-on acquisitions/stakes in private banking and Asian retail banking, more recently in India (Lakshmi Vilas Bank), China (SZRCB) and Taiwan (Citi consumer business). It delivered record high FY4 profits. Credit costs are very low, despite a 10 bp increase in 1Q25 to build up buffers against tariff uncertainties.
Recommendation Reviewed: May 09, 2025
Recommendation Changed: June 03, 2016
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 10 Mar 2025We view Morgan Stanley’s credit profile positively, supported by high capital levels, diversification in revenues and continued progress on building out wealth/asset management both organically and through acquisition.
Morgan Stanley’s capital markets businesses have rebounded as capital markets conditions improved in 2024, and should continue to benefit from market conditions in 2025. Wealth Management also saw some slowdown in growth in 2023 but appears back on track as market conditions improved.
Business Description
AS OF 10 Mar 2025- The company is now the sixth largest bank holding company by assets in the U.S. with $1.21 tn of assets as of 4Q24, and is the fourth largest by market capitalization ($192.5 bn as of March 7th, 2025).
- Morgan Stanley maintains "significant market positions in each of its business segments," which include Institutional Securities, Wealth Management, and Investment Management.
Risk & Catalysts
AS OF 10 Mar 2025Ted Pick took over as CEO in 2024, and MS was able to retain other key managers under consideration for the role; we see no clear changes in strategy as a result of the handover.
Much of Morgan Stanley’s core business is tied to global macroeconomic trends and investor risk appetite. Additionally, it has significant trading risk and counterparty exposures, though such risk appears well-managed overall and is reflected in capital requirements which are governed by the annual DFAST and SCB regime. MS has typically run with capital levels at or near the highest among GSIBs given the trading losses included in the Fed’s model.
Rapid growth in the Wealth business in recent years at MS has had some publicized missteps in vetting clients; there remains a possibility of regulatory action, though we wouldn’t expect anything that alters the long-term strategy for the Wealth business.
Key Metric
AS OF 10 Mar 2025| $ mn | FY20 | FY21 | FY22 | FY23 | 4Q24 |
|---|---|---|---|---|---|
| ROAE (annual) | 12.4% | 14.3% | 10.8% | 9.1% | 13.2% |
| ROAA (annual) | 1.0% | 1.3% | 0.9% | 0.8% | 1.1% |
| PPNR / Avg. Assets | 1.40% | 1.64% | 1.22% | 4.41% | 1.42% |
| Efficiency Ratio | 69% | 66% | 72% | 298% | 70% |
| Net charge-offs (LTM) / Loans | 0.05% | 0.05% | 0.01% | 0.06% | 0.08% |
| Common Dividend Payout | 20.9% | 25.4% | 46.3% | 215.5% | 42.9% |
| CET1 Ratio | 17.4% | 16.1% | 15.3% | 15.2% | 15.9% |
| Supplementary Leverage Ratio (SLR) | 7.4% | 5.6% | 5.5% | 5.5% | 5.6% |
| Liquidity Coverage Ratio (LCR) | 129% | 134% | 132% | 129% | 131% |
CreditSight View Comment
AS OF 14 Apr 2025We maintain our Market perform recommendation for Morgan Stanley, with our positive view of fundamentals supported by another solid quarter in 1Q25, where Morgan Stanley’s trading results benefited from high levels of activity across all its equities trading businesses amidst shifting macro and policy narratives. We see slightly better valuation among some of the money center banks (increasingly WFC, as well as JPM) but continue to prefer MS relative to GS. Performance has rebounded in the Wealth segment from a difficult 2023.
Recommendation Reviewed: April 14, 2025
Recommendation Changed: March 14, 2016
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 10 Mar 2025Goldman Sachs’ performance and market share in its core legacy businesses of investment banking and sales and trading have remained very solid, working through soft periods associated with rising rates; with market conditions improving into 2025 these businesses should continue to excel.
Goldman’s results have been weighed in recent years by costs associated with exiting the unsuccessful foray into various consumer banking businesses; such costs are largely in the rearview mirror. Wealth and Asset Management are now the most likely areas of growth in the coming years, where Goldman can leverage its strengths in HNW and alternative asset management.
Business Description
AS OF 10 Mar 2025- Goldman Sachs is now the fifth largest bank holding company in the U.S. with approximately $1.68 tn in assets as of 4Q24 and a market capitalization of $185.0 bn as of March 7th, 2025.
- Goldman Sachs presents its activities through three business segments: Global Banking & Markets, Asset & Wealth Management, and Platform Solutions.
- Goldman's historical strengths include equity and FICC sales & trading, investment banking, institutional investment management including alternatives, and high net worth wealth management. It has been expanding its wealth management client base, and adding other stable fee income streams amid a sluggish capital market environment.
Risk & Catalysts
AS OF 10 Mar 2025The early 2020’s have been a mixed bag– the foray into consumer lending was costly and ultimately was reversed, diverting capital and management attention and providing a meaningful drag on profitability. Goldman has re-focused on its core businesses, though its profile will remain less diversified than large GSIB peers.
Goldman could participate in further M&A to achieve its long-term strategic goals, most likely through add-on deals related to asset/wealth management.
Goldman could be impacted by the lack of liquidity in the secondary markets during periods of market turmoil, but for the most part, has been positively impacted by bouts of volatility which tend to spur more client trading activity. Goldman is subject to significant market and counterparty risks though these are captured in the DFAST and SCB regime.
Key Metric
AS OF 10 Mar 2025| $ mn | FY20 | FY21 | FY22 | FY23 | 4Q24 |
|---|---|---|---|---|---|
| ROAE (annual) | 10.3% | 21.3% | 9.7% | 7.3% | 12.0% |
| ROAA (annual) | 0.8% | 1.5% | 0.7% | 0.5% | 0.8% |
| PPNR / Avg. Assets | 1.34% | 1.86% | 1.08% | 3.29% | 1.16% |
| Efficiency Ratio | 66% | 54% | 65% | 282% | 63% |
| Net charge-offs (LTM) / Loans | 0.70% | 0.19% | 0.30% | 0.68% | 0.61% |
| Common Dividend Payout | 19.0% | 10.6% | 28.4% | 158.9% | 26.6% |
| CET1 Ratio | 14.1% | 13.6% | 15.0% | 14.4% | 15.0% |
| Supplementary Leverage Ratio (SLR) | 6.9% | 5.5% | 5.8% | 5.5% | 5.5% |
| Liquidity Coverage Ratio (LCR) | 128% | 122% | 129% | 128% | 126% |
CreditSight View Comment
AS OF 15 Apr 2025We maintain our Market perform recommendation for Goldman Sachs; we remain quite comfortable with the name fundamentally but see better value at JPMorgan and Wells Fargo among money center banks, particularly in the context of our shift to a more defensive stance across the sector. Goldman should be back to a normal pace of issuance so technicals should not be quite as much of a tailwind going forward as they had been in 2023 and early 2024, though the fundamental picture continues to improve with improved capital markets conditions as well as reduced drag from exited businesses. Market conditions thus far have aligned well with Goldman’s strengths in trading, though market conditions will likely have to stabilize for investment banking to regain momentum.
Recommendation Reviewed: April 15, 2025
Recommendation Changed: January 12, 2022
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.Bank of the Philippine Islands
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: BPIPM 5 30
- Indicative Yield-to-Maturity (YTM): 4.597%
- Credit Rating : BBB
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Fundamental View
AS OF 10 Mar 2025- Bank of the Philippine Islands (BPI) is the 3rd largest bank in the Philippines by assets.
- We view the bank as too big to fail given its systemic importance in the country. There is also a strong probability of support from the government in addition to its main shareholder, the Ayala Corporation if needed.
- BPI has a long history, and we view it as a fundamentally sound bank with strong and improved profitability, and comfortable liquidity. Capital management however has become less conservative, and while asset quality is relatively well managed, we are keeping an eye on strong growth in the non-wholesale book.
Business Description
AS OF 10 Mar 2025- The history of the Bank of the Philippine Islands traces back to 1851. It is the oldest bank in the Philippines and South East Asia. It was first listed on the Philippine Stock Exchange in 1971, and became a universal bank in 1982.
- Ayala Corporation, one of the biggest conglomerates in the country, became BPI's dominant shareholder in 1969. Ayala Corp still holds a 49% stake in the bank.
- BPI has been acquisitive across the years. It merged with Far East Bank and Trust Company and acquired Ayala Insurance Holdings Corp in 2000. It acquired DBS Bank Philippines in 2001 and Prudential Bank Philippines in 2005. DBS was a shareholder of BPI but exited its position in 2013. More recently in January 2024, it completed the acquisition of the Gokongwei conglomerate's Robinsons Bank.
- The bank is predominantly a corporate bank with 72% of its loan book outstanding to corporates, and the balance to MSME and retail as of 4Q24. The longer term target is to grow the retail and SME segment to a 30% share of loans.
Risk & Catalysts
AS OF 10 Mar 2025- Any rating downgrade of the Philippine sovereign would have a negative impact on BPI.
- BPI is focusing on unsecured retail and MSME growth, which has put pressure on asset quality and reduced capital buffers, and provision reserves have also been pared down. We see risks to asset quality from the strategy, but BPI’s large corporates-focused book (72% of total loans) provide comfort and provisioning capacity is strong.
- The declining rate environment as rate cuts come through will adversely impact NIMs, but management expects to maintain a flattish FY25 NIM, supported by RRR reductions and a continued pivot towards better yielding retail/MSME.
- The acquisition of Robinsons Bank was completed on 1 January 2024, and it opens BPI up to new customer segments such as teachers and motorcycle loans. The current footprint is small but we are wary of the brisk intended growth.
Key Metric
AS OF 10 Mar 2025| PHP mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 2.42% | 2.01% | 2.41% | 2.52% | 2.78% |
| Reported ROA (Cumulative) | 0.98% | 1.10% | 1.59% | 1.93% | 1.98% |
| Reported ROE (Cumulative) | 7.7% | 8.4% | 13.1% | 15.4% | 15.1% |
| Net Interest Margin | 3.49% | 3.30% | 3.59% | 4.09% | 4.31% |
| CET1 Ratio | 16.2% | 15.8% | 15.1% | 15.3% | 13.8% |
| Total Equity/Total Assets | 12.5% | 12.1% | 12.2% | 12.4% | n/m |
| NPL Ratio | 2.68% | 2.49% | 1.76% | 1.84% | 2.13% |
| Provisions/Loans | 1.94% | 0.91% | 0.58% | 0.22% | n/m |
| Liquidity Coverage Ratio | 232% | 221% | 195% | 207% | 159% |
| Net Stable Funding Ratio | 154% | 155% | 149% | 154% | 146% |
Our View
AS OF 27 Mar 2025Despite the heightened risk associated with growth in non-wholesale loans, BPI continues to demonstrate strong liquidity, a well-managed corporate loan portfolio (which accounts for 73% of total loans), and a solid underwriting track record. With adequate provisioning and a robust capital position, the bank remains a stable and dependable option for bond investors.
Recommendation Reviewed: March 27, 2025
Recommendation Changed: March 19, 2025
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.Security Bank (PH)
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.694%
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Fundamental View
AS OF 07 Mar 2025- Security Bank has historically been a wholesale focused bank. Rapid retail book expansion pre-pandemic led to a large asset quality hit when COVID-19 struck. The bank completed working through its risk issues at end-2021 and resumed brisk growth again in the retail book since.
- The bank had a less well-established deposit franchise than most peers, resulting in a heavy hit to NIMs when rates rose this cycle. This has led it to focus aggressively on growing the higher yielding retail and MSME segments, the latter via forming a new business banking segment in 2022.
- Capital ratios have fallen as the bank refocused on growth; the CET1 ratio is in a low 12-13% range.
- MUFG is a 20% shareholder of Security Bank.
Business Description
AS OF 07 Mar 2025- Security Bank was established in 1951 and obtained its universal banking license from the BSP in 1994. It is today the 9th largest bank in the Philippines.
- The bank is majority-owned by longtime owner Frederick Y. Dy (23.7%) and MUFG Bank (20%), which acquired its stake in April 2016.
- SB Finance, a joint venture between Security Bank and Thailand's Bank of Ayudhya (Krungsri), a consolidated subsidiary of MUFG, was launched in 2019. The unit is a consumer finance company formed to engage in the unsecured loans business in the Philippines, focusing on the lower mass retail segment.
- Security Bank's loan portfolio is 29% consumer, 3% MSME, ~28% middle market and ~40% corporate at 4Q24. The consumer and MSME book comprises mortgages (48%), auto loans (20%), credit card (23%) and small business loans (9%) as of 3Q24.
Risk & Catalysts
AS OF 07 Mar 2025- Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
- Margin pressure from the bank’s earlier weaker deposit franchise is easing with the declining rate environment and heavy growth focus on the higher yielding retail and MSME (business banking) segments, which continues to be the strategy going forward.
- While asset quality held up in FY24, we are cautious about risks from the brisk growth in riskier segments, given the thinning reserve cover and capital buffer.
- Capital ratios have fallen due to brisk RWA growth and are now behind peers. They are set to fall by a further ~1 ppt from the buying of a 25% stake in Home Credit Finance Philippines (HCPH) from MUFG, which would take the CET1 ratio to ~12%. We regard this level as low, but do not rule out capital support from MUFG if needed.
Key Metric
AS OF 07 Mar 2025| PHP mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.71% | 4.43% | 4.23% | 4.49% | 4.73% |
| ROA | 1.0% | 1.0% | 1.4% | 1.1% | 1.1% |
| ROE | 6.2% | 5.6% | 8.4% | 7.0% | 8.1% |
| PPP ROA | 4.24% | 2.30% | 2.17% | 1.97% | 2.18% |
| CET1 Ratio | 19.2% | 19.1% | 16.1% | 15.3% | 12.9% |
| Total Equity/Total Assets | 18.89% | 17.88% | 14.94% | 15.62% | 12.50% |
| Gross NPL Ratio | 3.90% | 3.94% | 2.95% | 3.36% | 2.85% |
| Net LDR | 99.6% | 85.7% | 83.0% | 88.8% | 84.6% |
| Liquidity Coverage Ratio | 166% | 150% | 144% | 158% | 178% |
| Net Stable Funding Ratio | 132% | 138% | 122% | 131% | 130% |
CreditSight View Comment
AS OF 13 Mar 2025Security Bank has historically been a wholesale focused bank. Rapid retail expansion leading up to the pandemic led to a large asset quality fallout. It has since resumed aggressive growth in higher yielding but riskier retail and MSME segments to counter NIM pressure. This along with a now declining rate environment will continue to support the NIM. Asset quality held up in FY24 but we are concerned about risks from the pace and direction of loan growth. The previously strong capital position has now fallen behind peers due to brisk RWA growth, and will fall further to a low ~12% level following the acquisition of a 25% stake in Home Credit Finance Philippines from MUFG. The NPL cover has declined to below 80%. We have an Underperform recommendation.
Recommendation Reviewed: March 13, 2025
Recommendation Changed: May 21, 2024
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 30 Oct 2024Standard Chartered has been making good progress in the past few years, improving its asset quality and profitability and dealing with legacy litigation issues. Capital, funding and liquidity look solid.
However, tension between China and the West, and global economic headwinds continue to cloud the near term outlook.
Its unusual business mix – headquartered and regulated in the UK but operating primarily in Asia, Africa and the Middle East – means it is well diversified but sensitive to geopolitical developments and emerging market volatility.
Business Description
AS OF 03 Mar 2025- Standard Chartered PLC is the holding company and listed entity of the group, in which Standard Chartered Bank is the main operating company.
- Although Standard Chartered is headquartered in London and therefore subject to UK banking regulation, its operations are mainly in Asia (Hong Kong is its biggest single market, as part of its Greater China & North Asia region), Africa and the Middle East. It is present in over 60 markets.
- It has the usual variety of businesses across these regions, including corporate and institutional banking, retail banking, commercial banking and private banking. It specialises in trade finance and cross-border cash management.
- The group announced a revised strategy in 2019 aimed at improving profitability after several years of de-risking, with a targeted return on tangible equity of 10%.
- It is classified as a G-SIB, with a regulatory capital buffer of 1%.
Risk & Catalysts
AS OF 03 Mar 2025Anti-government protests in Hong Kong, a slowing economy in China and a weak commercial real estate sector, and US/China trade tensions have threatened the growth and stability of some of Standard Chartered’s key markets.
A number of Standard Chartered’s markets have underperformed in the past and have therefore been seen as turnaround stories, including India, Korea, Indonesia and the UAE.
The group has had to improve its AML and sanctions controls. In April 2019, it paid a $947 mn fine to US authorities over breaches of US sanctions and a £102 mn fine to the UK FCA for AML weaknesses.
Key Metric
AS OF 03 Mar 2025| $ mn | 4Q24 | Y24 | Y23 | Y22 | Y21 |
|---|---|---|---|---|---|
| Return on Equity | 4.1% | 8.0% | 7.0% | 5.7% | 4.5% |
| Total Revenues Margin | 2.3% | 2.3% | 2.2% | 2.0% | 1.8% |
| Cost/Income | 72.4% | 64.0% | 64.1% | 66.9% | 74.3% |
| CET1 Ratio (Transitional) | 14.2% | 14.2% | 14.1% | 14.0% | 14.1% |
| CET1 Ratio (Fully-Loaded) | 14.2% | 14.2% | 14.1% | 13.9% | 14.1% |
| Leverage Ratio (Fully-Loaded) | 4.8% | 4.8% | 4.7% | 4.8% | 4.9% |
| Loan Impairment Charge | 0.2% | 0.2% | 0.2% | 0.3% | 0.1% |
| Impaired Loans (Gross)/Total Loans | 2.2% | 2.2% | 2.5% | 2.5% | 2.7% |
CreditSight View Comment
AS OF 02 May 2025We revised our recommendation on Standard Chartered HoldCo senior from Underperform to Market perform on 26 April 2023, but we changed our recommendations on Tier 2 and AT1 from Fair to Rich on 10 January 2024. The changes reflect StanChart’s recent resilient performance, while taking into account the potential impact from US tariffs policies and exposure to China. Capital and liquidity ratios are robust, and profitability has improved significantly, but the bank continues to face geopolitical tensions inherent in its extensive operations in Hong Kong, China and the rest of Asia.
Recommendation Reviewed: May 02, 2025
Recommendation Changed: April 26, 2023
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.Security Bank
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.704%
- Credit Rating : BBB
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Fundamental View
AS OF 27 Feb 2025- Security Bank is the 7th largest bank in the Philippines by total assets and was established on June 18, 1951. Its dollar bonds provide better yield pickup compared to its nearest comparable. We remain comfortable with the bond given Security Bank’s total capital ratio of 14.20%, which is 400 basis points above the minimum regulatory hurdle, which can buffer modest credit losses in its loan portfolios should macroeconomic headwinds worsen.
Business Description
AS OF 27 Feb 2025- Security Bank is the 7th largest bank in the Philippines by total assets and was established on June 18, 1951. Security Bank’s businesses include wholesale banking, financial markets, and retail banking. The bank provides commercial banking services such as deposit products, loans and trade finance, domestic and foreign fund transfers, treasury, foreign exchange, and trust services.
- Security Bank's loan portfolio is 32% consumer & MSME, 28% middle market, and 40% corporate as of 3Q 2024.
Risk & Catalysts
AS OF 27 Feb 2025- Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
- Given the current rate cut environment that drives funding costs lower, Its strategy to aggressively capture market share in the retail and MSME segment might allow the bank to deliver faster growth and higher net interest income margin.
- Rapid expansion on higher yielding retail and MSME segments could worsen asset quality and increase credit costs.
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.Kingdom of Saudi Arabia
- Bond: KSA 3.25 26
- Indicative Yield-to-Maturity (YTM): 4.321%
- Credit Rating : A
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Country Overview
AS OF 27 Feb 2025- The Kingdom of Saudi Arabia’s economy is heavily reliant on its petroleum sector. Oil accounts for almost 40% of Saudi’s GDP and 75% of its fiscal revenue.
- Saudi Arabia has the second largest proven petroleum reserves and fourth largest measured natural gas reserves. It is currently the largest exporter of petroleum in the world.
- As of 2023, Saudi Arabia’s main exports were China (12.0% of total exports), Japan (6.4%), India (6.3%), and South Korea (6.1%)
Macro Fundamentals
AS OF 27 Feb 2025- There is an expectation that deficits may remain within the 4% -7% assuming Brent averages at less than USD 75 per barrel in 2025. Despite this, we still expect its credit to remain stable given that its deficits are still in line with developed economies.
- The debt-to-GDP ratio of about 28.3% remains low compared to its developed economy peers. Combined with sizable reserve buffers, this mitigates any potential headwinds from the country’s oil sector.
- Saudi Arabia’s inflation is within modest levels given that the riyal is pegged at 3.75 riyals per US dollar since 1986. Its monetary authority also mirrors the US Fed’s decisions when it comes to local rates.
Risk & Catalysts
AS OF 27 Feb 2025- Saudi Arabia’s government revenues are closely linked to fluctuations in oil prices. Lower oil prices could result in slower economic growth and higher deficits.
- Saudi Arabia has huge forex reserves to maintain its peg to the US dollar in the event of external shocks.
- The government aims to diversify the economy with multibillion investments in the technology and tourism sectors. However, the high costs could pose a risk to the government budget balance.
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.Meta Platforms
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Technology
- Country: US
- Bond: META 4.95 33
- Indicative Yield-to-Maturity (YTM): 4.95%
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Fundamental View
AS OF 25 Feb 2025We are encouraged by Meta’s strong advertising growth relative to peers in 2023 and 2024. Meta has extremely strong credit metrics of 0.3x gross leverage and $49 bn net cash. We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments in AI and the metaverse.
Longer term, we expect Meta to adhere to its previously communicated financial policy of maintaining a positive or neutral cash balance. Meta does have legal and regulatory risks notably an FTC suit that seeks to unwind its prior acquisitions of Instagram and WhatsApp. However, not all event risk is negative as Meta would be the greatest beneficiary from a potential TikTok ban.
Business Description
AS OF 25 Feb 2025- Meta Platforms is the largest social networking company in the world. Meta generates substantially all of its revenue from advertising which includes Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications.
- In 4Q24, Family of Apps was 98% of revenue (96.7% from advertising and 1.1% from other) and Reality Labs was 2% of revenue. Reality Labs generated $17.7 bn in operating losses during LTM 4Q24 as the company is investing heavily in the metaverse.
- There are 3.35 bn Family Daily Active People (DAP) as of 4Q24, and the Family Average Revenue per Person (ARPP) was $14.25 quarterly in 4Q24.
- Meta is headquartered in Menlo Park, California. Employee headcount was >74k at 4Q24.
Risk & Catalysts
AS OF 25 Feb 2025In December 2020, the FTC filed a lawsuit against Meta targeting its acquisitions of Instagram and Whatsapp. If Meta is forced to unwind prior acquisitions, this would be a credit negative given reduced scale and diversification.
Meta’s business model relies almost entirely on user-generated content. As such, there are risks related to customer privacy (e.g., Cambridge Analytica data scandal in 2018) and regulatory changes (e.g., Section 230 protections).
In April 2024, the US signed into law a bill requiring a sale or ban of TikTok, although Trump signed an executive order instructing the Attorney General to not enforce the TikTok ban for 75 days (to 4/5/2025). If a ban is implemented, this would positively impact Meta and others with competing short-form video products.
In October 2022, activist Altimeter Capital wrote a letter to Zuck and Board although it was on the friendly-side of activism and some suggestions have already been implemented.
Key Metric
AS OF 25 Feb 2025| $ mn | 2020 | 2021 | 2022 | 2023 | LTM 4Q24 |
|---|---|---|---|---|---|
| Revenue YoY % | 21.6% | 37.2% | (1.1%) | 15.7% | 21.9% |
| EBITDA | 46,069 | 63,882 | 49,622 | 71,955 | 101,568 |
| EBITDA Margin | 53.6% | 54.2% | 42.6% | 53.3% | 61.7% |
| CapEx % of Sales | 18.3% | 16.3% | 27.5% | 20.8% | 23.8% |
| Sh. Ret. % of CFO-CapEx | 27% | 116% | 152% | 46% | 68% |
| Net Debt | (61,954) | (47,998) | (30,815) | (47,018) | (48,989) |
| Gross Leverage | 0.0x | 0.0x | 0.2x | 0.3x | 0.3x |
| EV / EBITDA | 15.8x | 14.0x | 5.8x | 12.3x | 14.5x |
CreditSight View Comment
AS OF 01 May 2025We are encouraged by Meta’s strong advertising growth relative to peers in 2023, 2024, and 1Q25. Meta has extremely strong credit metrics of 0.3x gross leverage and $41 bn net cash. We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments in AI and the metaverse. Longer term, we expect Meta to adhere to its previously communicated financial policy of maintaining a positive or neutral cash balance. Meta does have legal and regulatory risks notably an FTC suit that seeks to unwind its prior acquisitions of Instagram and WhatsApp. In addition, the recent EC decision could have an impact as early as 3Q25. However, not all event risk is negative as Meta would be the greatest beneficiary from a potential TikTok ban.
Recommendation Reviewed: May 01, 2025
Recommendation Changed: April 18, 2024
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.Amazon.com
- Sector: ConsumerTechnology Media and Telecommunications
- Sub Sector: Retail/GrocersTechnology
- Region: US
- Bond: AMZN 4.65 29
- Indicative Yield-to-Maturity (YTM): 4.021%
- Credit Rating : A1/AA/AA-
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Fundamental View
AS OF 25 Feb 2025- We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. The recent operating trends reinforce our views particularly the margin improvement. We continue to believe that Amazon is an underappreciated winner in Generative AI given the breadth of its cloud business and offerings including custom silicon and its platform Bedrock.
- Gross leverage declined to 0.4x and 0.9x on a lease-adjusted basis. While Amazon is increasing its capex spend (along with the other hyperscalers), we are encouraged by its debt reduction and zero shareholder returns. Also, Amazon’s equity cushion is ~$2.2 tn. There are risks related to the FTC suit although we expect those to be addressed by behavioral remedies, and we view a breakup as unlikely.
Business Description
AS OF 25 Feb 2025- Amazon is an e-commerce company which sells a wide range of its own products and those of 3rd party sellers. Amazon offers fulfillment services for 3rd party sellers (FBA) and sells cloud computing services (AWS). In 4Q24, 3rd party units were 62% of total paid units, and FBA units are a majority of 3rd party units.
- In LTM 4Q24, NA segment was 61% of sales, International was 22% of sales, and AWS was 17% of sales.
- Amazon disclosed it surpassed 200 mn Prime members in April 2021. The annual membership was increased in February 2022 from $119 to $139 in the US, although fees vary by country. In mid-2019, Amazon Prime began to transition from 2-day to 1-day shipping. Amazon Prime also offers Prime Video, streaming music, and other benefits.
- In 2006, Amazon launched AWS which remains the leader in cloud computing (IaaS/PaaS). Amazon sells its own devices (e-reader, smart speaker, streaming media player, etc.).
Risk & Catalysts
AS OF 25 Feb 2025- We think Amazon has moderate event risk given its large size (~$2.2 tn market cap).
- While Amazon is increasing its CapEx spend, we are encouraged by the $14 bn reduction in lease-adjusted debt from year-end 2022 through year-end 2024.
- Amazon continues to face regulatory scrutiny. In September 2023, the FTC and 17 states filed a lawsuit against Amazon and accused the company of (1) punishing sellers for offering lower prices elsewhere and (2) making Prime eligibility conditional on usage of fulfillment services. The biggest risk would be a breakup, although we view that as unlikely.
- Amazon’s $14 bn acquisition of Whole Foods has shown its proclivity for large M&A, although the regulatory environment could make large deals challenging.
Key Metric
AS OF 25 Feb 2025| $ mn | 2020 | 2021 | 2022 | 2023 | LTM 4Q24 |
|---|---|---|---|---|---|
| Revenue YoY % | 37.6% | 21.7% | 9.4% | 11.8% | 11.0% |
| EBITDA | 57,284 | 71,994 | 74,593 | 110,305 | 144,162 |
| EBITDA Margin | 14.8% | 15.3% | 14.5% | 19.2% | 22.6% |
| CapEx % of Sales | 12.1% | 13.3% | 11.5% | 8.5% | 12.3% |
| Sh. Ret. % of CFO-CapEx | 0% | 0% | (49%) | 0% | 0% |
| Net Debt | (50,497) | (44,771) | 7,316 | (19,598) | (43,202) |
| Gross Leverage | 0.6x | 0.7x | 1.0x | 0.6x | 0.4x |
| EV / EBITDA | 28.3x | 23.3x | 11.7x | 14.4x | 16.1x |
CreditSight View Comment
AS OF 02 May 2025We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. AWS is now a $117 bn run-rate business and delivered record operating margin of 39.5% in 1Q25. We continue to believe that Amazon will be a winner in Generative AI given the breadth of its cloud business and offerings including custom silicon (Trainium, Inferentia) and its platform Amazon Bedrock. We estimate leverage was roughly flat at 0.4x gross and 0.9x lease-adjusted gross. While Amazon’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. Also, Amazon’s market cap is $2.1 tn. There are risks related to the FTC suit although we view a breakup as unlikely.
Recommendation Reviewed: May 02, 2025
Recommendation Changed: May 01, 2024
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group