Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
Research House: AMMB
KUALA LUMPUR: AmResearch is maintaining its Buy rating on RHB Capital with a revised fair value of RM7.20/share (from RM7.10/share previously) on higher returns on equity (ROE) expected.
"Our new fair value is based on higher fair P/BV of 1.8x (from 1.7x), as our ROE has now been tweaked upwards to 14.9% (from 14.8%) FY10F following our company visit," it said.
AmResearch said it believed RHB Cap was underestimated in the momentum in its loan growth. Loan growth had picked up significantly since its reorganisation exercise in early 2007 - whereby its banking, investment banking, Islamic and insurance divisions are now regrouped under a more customer-centric -- Retail, Corporate and Investment Bank (CIB), Islamic and International divisions.
It said RHB Cap's loan growth was not about only new lending to the public sector. Market share of loans have risen all round in key areas in FY09 versus FY08. They are: (a) Mortgage loan is up 7.4% from 7.1%; (b) Non-residential mortgages up 5.3% from 4.3%; (c) Credit cards to 8.5% from 8.4%; (d) Auto loans to 6.7% from 6.5%, (e) Working capital loans to 11.3% from 10.0%; (f) SME loans to 9.5% from 8.5%; and (g) Overall market share of 8.5% versus 8.2%.
"Besides this, there is room for non-interest income to come in stronger-than-expected, particularly on the forex side, given a pick-up in trade activities. Should forex profits reach FY07 and FY08's levels of say RM250mil (our current forecast: RM223.2mil), we estimate a 1.4% upgrade in net earnings for FY10F, taking ROE to 15.1% - our fair value would be upgraded further to RM7.40/share," it said.
Company Name: RHB CAPITAL BHD
Research House: AMMB
KUALA LUMPUR: AmResearch is maintaining its Buy rating on RHB Capital with a revised fair value of RM7.20/share (from RM7.10/share previously) on higher returns on equity (ROE) expected.
"Our new fair value is based on higher fair P/BV of 1.8x (from 1.7x), as our ROE has now been tweaked upwards to 14.9% (from 14.8%) FY10F following our company visit," it said.
AmResearch said it believed RHB Cap was underestimated in the momentum in its loan growth. Loan growth had picked up significantly since its reorganisation exercise in early 2007 - whereby its banking, investment banking, Islamic and insurance divisions are now regrouped under a more customer-centric -- Retail, Corporate and Investment Bank (CIB), Islamic and International divisions.
It said RHB Cap's loan growth was not about only new lending to the public sector. Market share of loans have risen all round in key areas in FY09 versus FY08. They are: (a) Mortgage loan is up 7.4% from 7.1%; (b) Non-residential mortgages up 5.3% from 4.3%; (c) Credit cards to 8.5% from 8.4%; (d) Auto loans to 6.7% from 6.5%, (e) Working capital loans to 11.3% from 10.0%; (f) SME loans to 9.5% from 8.5%; and (g) Overall market share of 8.5% versus 8.2%.
"Besides this, there is room for non-interest income to come in stronger-than-expected, particularly on the forex side, given a pick-up in trade activities. Should forex profits reach FY07 and FY08's levels of say RM250mil (our current forecast: RM223.2mil), we estimate a 1.4% upgrade in net earnings for FY10F, taking ROE to 15.1% - our fair value would be upgraded further to RM7.40/share," it said.
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