December 23, 2010

RHBCAP - OSK maintains 'buy' call on RHBCap

Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
Research House: OSK



OSK Research has maintained a "Buy" call for RHB Capital Bhd with a target price of RM9.56.

It said RHB's stock was cheap as it was trading at an implied financial year 2011 (FY11) price earnings ratio of only 11.7 times despite having outperformed the boarder market by 44.8 per cent year-to-date.

"Our recent meeting with the management reinforces our belief that the group is on track to deliver return on equity in excess of 14 per cent, backed by surprising strong loans growth exceeding 20 per cent and stable asset quality.

"The company is our top mid-cap banking pick with return on equity generation at the upper-end of the industry average while its current FY11 price by volume of 1.72 times is at a discount to the industry's 1.86 times," OSK said in a research note today.

OSK explained that the key reason for RHB's below industry valuations was EPF's commitment to further its stake by another nine per cent which would further enhance the stock's liquidity.
-- BERNAMA


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