Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
Research House: AMMB
KUALA LUMPUR: HONG LEONG BANK BHD [] (HLBB) shares rose on Thursday, April 28 and gained 16 sen to RM10.50 after AmResearch said the bank was nurturing a quality regional footprint.
AmResearch maintained its Buy rating on HLBB , with an upgraded fair value to RM12.20 from RM11.20 previously.
It said this was based on calendarised 2011 ROE of 15.7%, adding that this leads to a fair P/BV of 2.3 times (from 2.1 times previously).
The research house said HLBB's initial investment in a 19.99% stake in Bank of Chengdu Co Ltd since October 2007 is just beginning to pay off handsomely.
Bank of Chengdu's loan size is estimated to be similar to HLBB's in two years' time, which is significant considering that Bank of Chengdu's loan book was only about 30% of HLBB's in FY06 just before HLBB stepped in, it said.
More importantly, it said HLBB had done an excellent job in nurturing quality growth in Bank of Chengdu.
In terms of asset quality, Bank of Chengdu's gross NPL ratio was 1.31% as at end-FYE12/09, a vast improvement from 28.5% in FYE12/06, it said.
Loan loss cover was 167% as at FYE12/09, versus 154% in FYE12/08, it said.
Bank of Chengdu's contribution to overall pre-tax profit has now reached 12.4% in the latest December quarter, it said.
'We are now projecting overall contribution to rise to 15.9% in FY11F and 17.3% in FY12F. HLBB's overall annualised loans growth over the past two quarters has surprised on the upside, with the recent annualised loans growth touching a multi-year high of 17% in its 1H ending 31 December 2010.
'This was way ahead of the industry's similarly annualised loans growth of 11.5% during the same period. We maintain our view that HLBB provides a strong exposure to domestic top line growth, as well as a meaningful footprint in China, backed by a high quality risk management culture,' it said.
Company Name: HONG LEONG BANK BHD
Research House: AMMB
KUALA LUMPUR: HONG LEONG BANK BHD [] (HLBB) shares rose on Thursday, April 28 and gained 16 sen to RM10.50 after AmResearch said the bank was nurturing a quality regional footprint.
AmResearch maintained its Buy rating on HLBB , with an upgraded fair value to RM12.20 from RM11.20 previously.
It said this was based on calendarised 2011 ROE of 15.7%, adding that this leads to a fair P/BV of 2.3 times (from 2.1 times previously).
The research house said HLBB's initial investment in a 19.99% stake in Bank of Chengdu Co Ltd since October 2007 is just beginning to pay off handsomely.
Bank of Chengdu's loan size is estimated to be similar to HLBB's in two years' time, which is significant considering that Bank of Chengdu's loan book was only about 30% of HLBB's in FY06 just before HLBB stepped in, it said.
More importantly, it said HLBB had done an excellent job in nurturing quality growth in Bank of Chengdu.
In terms of asset quality, Bank of Chengdu's gross NPL ratio was 1.31% as at end-FYE12/09, a vast improvement from 28.5% in FYE12/06, it said.
Loan loss cover was 167% as at FYE12/09, versus 154% in FYE12/08, it said.
Bank of Chengdu's contribution to overall pre-tax profit has now reached 12.4% in the latest December quarter, it said.
'We are now projecting overall contribution to rise to 15.9% in FY11F and 17.3% in FY12F. HLBB's overall annualised loans growth over the past two quarters has surprised on the upside, with the recent annualised loans growth touching a multi-year high of 17% in its 1H ending 31 December 2010.
'This was way ahead of the industry's similarly annualised loans growth of 11.5% during the same period. We maintain our view that HLBB provides a strong exposure to domestic top line growth, as well as a meaningful footprint in China, backed by a high quality risk management culture,' it said.
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