DBS Group | Hold Target price: S$17.83 Jan 3 close: S$17.32 OCBC Investment Research, Jan 3

While the global outlook is showing some signs of improvement, the underlying softness for the Singapore economy and selective sectors (including oil and gas and property) remains.

For DBS, the five-year average PB ratio is around 1.15, but with a still mixed-outlook for the region, we think that for the near term, the stock will continue to trade at a discount to this level, likely within the 0.95x-1.05x PB band (translating to fair value estimates of S$16.94 to S$18.72). With the recent re-rating of banking stocks, we have moved our valuation peg to 1x book, resulting in a fair value estimate of S$17.83. A better level to re-enter the stock will be at S$16.80 or lower.