Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
Research House: MAYBANK
RHB Capital Bhd (RHBCap)
(June 1, RM5.77)
Maintain buy at RM5.75 with target price raised to RM6.60 (from RM6.40): 1QFY10 net profit of RM350 million made up 26% of our and consensus' full-year forecast, with the slight upside coming from lower provision for impaired loan loss after the switch to FRS 139 from GP3.
Loan growth was also stronger than expected. We raise our 2010 net profit forecast by 5%, forecasting a strong 18% growth. Our discount dividend model-based target price is slightly enhanced to RM6.60. The stock remains a buy.
1QFY10 net profit up 53% year-on-year (y-o-y), 4% quarter-on-quarter (q-o-q). The strong y-o-y jump was broad based, coming from loan growth (+15.8%), net interest margin (NIM) expansion (+12 basis points), higher fee and foreign exchange income, and lower provision for impaired loan loss (-52%).
The relatively smaller q-o-q net profit growth was mainly due to lower operational expenditure (-13%) with some one-off marketing and administration costs in 4Q09 not being repeated, and lower provision for impaired loan loss (-25%).
NIM meanwhile rose 1bps q-o-q to 2.82%. Credit charge retraced 65bps y-o-y and 18bps q-o-q to 0.46%.
Loans grew a strong 17.4% annualised, driven by loans to government and statutory bodies, and individuals, while credit to businesses contracted marginally.
The management believes the strong momentum is sustainable. We raise our loan growth forecast for 2010 to 15% from 12%. We retain our credit charge assumption at 0.7% as guided.
Our net profit forecast is slightly enhanced by 5% for 2010, and 1%-2% per annum for 2011-2012. Our new forecast implies a return on equity of 15.2% for 2010, a tinge higher than management's 14.5%-15% target.
Bank Negara's approval has been obtained while discussions are still ongoing with Bank Indonesia. The acquisition, for an 80% stake, is now targeted for completion by end-3Q10 versus mid-2010 previously.
We have earlier estimated an EPS (earnings per share) dilution of 10% for an estimated 1-for-6 rights issue to raise up to RM1.3 billion to fund the acquisition.
At single-digit forward PERs (price-earnings ratio), RHB Cap remains the cheapest banking stock under our coverage. Our raised RM6.60 target price implies 10 times 2010 PER (before rights dilution). ' Maybank IB Research, June 1
This article appeared in The Edge Financial Daily, June 2, 2010.
Company Name: RHB CAPITAL BHD
Research House: MAYBANK
RHB Capital Bhd (RHBCap)
(June 1, RM5.77)
Maintain buy at RM5.75 with target price raised to RM6.60 (from RM6.40): 1QFY10 net profit of RM350 million made up 26% of our and consensus' full-year forecast, with the slight upside coming from lower provision for impaired loan loss after the switch to FRS 139 from GP3.
Loan growth was also stronger than expected. We raise our 2010 net profit forecast by 5%, forecasting a strong 18% growth. Our discount dividend model-based target price is slightly enhanced to RM6.60. The stock remains a buy.
1QFY10 net profit up 53% year-on-year (y-o-y), 4% quarter-on-quarter (q-o-q). The strong y-o-y jump was broad based, coming from loan growth (+15.8%), net interest margin (NIM) expansion (+12 basis points), higher fee and foreign exchange income, and lower provision for impaired loan loss (-52%).
The relatively smaller q-o-q net profit growth was mainly due to lower operational expenditure (-13%) with some one-off marketing and administration costs in 4Q09 not being repeated, and lower provision for impaired loan loss (-25%).
NIM meanwhile rose 1bps q-o-q to 2.82%. Credit charge retraced 65bps y-o-y and 18bps q-o-q to 0.46%.
Loans grew a strong 17.4% annualised, driven by loans to government and statutory bodies, and individuals, while credit to businesses contracted marginally.
The management believes the strong momentum is sustainable. We raise our loan growth forecast for 2010 to 15% from 12%. We retain our credit charge assumption at 0.7% as guided.
Our net profit forecast is slightly enhanced by 5% for 2010, and 1%-2% per annum for 2011-2012. Our new forecast implies a return on equity of 15.2% for 2010, a tinge higher than management's 14.5%-15% target.
Bank Negara's approval has been obtained while discussions are still ongoing with Bank Indonesia. The acquisition, for an 80% stake, is now targeted for completion by end-3Q10 versus mid-2010 previously.
We have earlier estimated an EPS (earnings per share) dilution of 10% for an estimated 1-for-6 rights issue to raise up to RM1.3 billion to fund the acquisition.
At single-digit forward PERs (price-earnings ratio), RHB Cap remains the cheapest banking stock under our coverage. Our raised RM6.60 target price implies 10 times 2010 PER (before rights dilution). ' Maybank IB Research, June 1
This article appeared in The Edge Financial Daily, June 2, 2010.
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