Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
Research House: AMMB
RHB Capital Bhd
(Feb 23, RM8.10)
Maintain buy at RM8.17 with fair value RM9.70: We maintain our 'buy' rating on RHB Capital Bhd (RHB Cap) with an unchanged fair value of RM9.70. This is based on a return on equity (ROE) of 15.4% FY11F leading to a fair price-to-book value of 1.8 times FY11F.
RHB Cap recorded an 8.2% quarter-on-quarter (q-o-q) and 13% year-on-year (y-o-y) increase in 4QFY10 net earnings to RM380.2 million. The full-year net earnings came in at RM1.42 billion, 4.2% above our forecast and 2.3% above consensus estimate of RM1.39 billion. The upside surprise is mainly in a much lower than expected loan loss provision, but we view this as being backed by a significantly better asset quality.
The company declared a higher final gross dividend per share (GDPS) of 21.38 sen (Net DPS: 16.04 sen). The total GDPS for FY10 would be 26.38 sen, above our estimated 25 sen and consensus' 21.8 sen. Net dividend payout ratio for FY10 is 30%, in line with the company's guidance in the early part of 2010.
Gross loans grew 4.6% q-o-q in 4QFY10 and 23.5% in FY10, above the company's earlier guidance of 15%. Overall, gross impaired loans balance has vastly improved, coming off by a significant 18.6% q-o-q.
This was derived from both write-offs as well as much better recoveries. Gross impaired loans ratio has now been brought down to 4.4% as at end-December 2010, which is 1.2 percentage point lower than end-September 2010's 5.6%.
RHB Cap's latest set of results is highly convincing in our view, in terms of strong top line growth, significantly better asset quality and its commitment to enhance shareholders return in the form of better dividends.
The company unveiled its main KPI targets for FY11F: (i) ROE target in excess of 15.2%; (ii) Gross impaired loans ratio of 4% FY11F (FY10: 4.4%); (iii) Loans growth of at least 15%; and (iv) Deposit growth of at least 15%. With the latest KPI targets, we have now modelled in an ROE of 15.4% for FY11F, on net earnings of RM1.73 billion. We expect upgrades to consensus' net earnings of RM1.6 billion.
We maintain 'buy' on RHB Cap. Key re-rating catalysts are: (i) Ability to achieve its new key KPI targets for FY11F; (ii) Successful execution of its Indonesia expansion; and (iii) Improved asset quality data in terms of better gross impaired loans ratio as well as a higher loan loss cover. ' AmResearch, Feb 23
This article appeared in The Edge Financial Daily, February 24, 2011.
Company Name: RHB CAPITAL BHD
Research House: AMMB
RHB Capital Bhd
(Feb 23, RM8.10)
Maintain buy at RM8.17 with fair value RM9.70: We maintain our 'buy' rating on RHB Capital Bhd (RHB Cap) with an unchanged fair value of RM9.70. This is based on a return on equity (ROE) of 15.4% FY11F leading to a fair price-to-book value of 1.8 times FY11F.
RHB Cap recorded an 8.2% quarter-on-quarter (q-o-q) and 13% year-on-year (y-o-y) increase in 4QFY10 net earnings to RM380.2 million. The full-year net earnings came in at RM1.42 billion, 4.2% above our forecast and 2.3% above consensus estimate of RM1.39 billion. The upside surprise is mainly in a much lower than expected loan loss provision, but we view this as being backed by a significantly better asset quality.
The company declared a higher final gross dividend per share (GDPS) of 21.38 sen (Net DPS: 16.04 sen). The total GDPS for FY10 would be 26.38 sen, above our estimated 25 sen and consensus' 21.8 sen. Net dividend payout ratio for FY10 is 30%, in line with the company's guidance in the early part of 2010.
Gross loans grew 4.6% q-o-q in 4QFY10 and 23.5% in FY10, above the company's earlier guidance of 15%. Overall, gross impaired loans balance has vastly improved, coming off by a significant 18.6% q-o-q.
This was derived from both write-offs as well as much better recoveries. Gross impaired loans ratio has now been brought down to 4.4% as at end-December 2010, which is 1.2 percentage point lower than end-September 2010's 5.6%.
RHB Cap's latest set of results is highly convincing in our view, in terms of strong top line growth, significantly better asset quality and its commitment to enhance shareholders return in the form of better dividends.
The company unveiled its main KPI targets for FY11F: (i) ROE target in excess of 15.2%; (ii) Gross impaired loans ratio of 4% FY11F (FY10: 4.4%); (iii) Loans growth of at least 15%; and (iv) Deposit growth of at least 15%. With the latest KPI targets, we have now modelled in an ROE of 15.4% for FY11F, on net earnings of RM1.73 billion. We expect upgrades to consensus' net earnings of RM1.6 billion.
We maintain 'buy' on RHB Cap. Key re-rating catalysts are: (i) Ability to achieve its new key KPI targets for FY11F; (ii) Successful execution of its Indonesia expansion; and (iii) Improved asset quality data in terms of better gross impaired loans ratio as well as a higher loan loss cover. ' AmResearch, Feb 23
This article appeared in The Edge Financial Daily, February 24, 2011.
No comments:
Post a Comment