Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD
Research House: HWANGDBS
Malayan Banking Bhd
(May 13, RM8.85)
Maintain buy at RM8.74 with target price of RM10.80: Net profit of RM1.1 billion in 3QFY11 (+2% quarter-on-quarter; +11% year-on-year) takes 9M11 earnings to RM3.3 billion (76% of our full year FY11F). Net interest income edged down 2% q-o-q due to net interest margin (NIM) compression (2.16% against 2.31% in 2QFY11) that was prevalent in all regions. Loans surged 7% q-o-q led by Singapore and Indonesia. Provisions fell sharply (-45% q-o-q) due to an improving loan portfolio, absence of some non-recurring allowances, and higher recoveries. Tier-1 and risk-weighted capital asset ratio stood at 11.6% and 14.1%, respectively (incorporating dividend reinvestment plan reinvestment rate of 91%).
Maybank has completed the acquisition of Kim Eng Holdings (KEH), it now owns 50.2%, and launched a mandatory general offer for the remaining shares. It also offered to buy out Kim Eng Securities (Thailand), currently 55.3%-owned by KEH, at 16 baht per share. We expect the privatisation to be successful. Strong revenue and loan traction at Bank Internasional Indonesia, MCB Bank Ltd and its Singapore operations should drive growth going forward. However, NIM is likely to remain soft, although overall asset quality should generally improve. There could be short-term pressure on PT Wahana Ottomitra Multiartha Tbk's (WOM Finance) motorcycle non-performing loans.
We raise FY11/13F loan growth to 15% to 18% (from 13% to 14%), reduce FY11 credit charge to 40 basis points (from 47bps), and imputed potential income (circa RM200 million) from Kim Eng in FY12/13F.
Maintain 'buy' and RM10.80 target price based on the Gordon Growth Model with the following assumptions: 16.5% return on equity, 7% growth and 10.8% cost of equity. ' HwangDBS Vickers Research, May 13
This article appeared in The Edge Financial Daily, May 16, 2011.
Company Name: MALAYAN BANKING BHD
Research House: HWANGDBS
Malayan Banking Bhd
(May 13, RM8.85)
Maintain buy at RM8.74 with target price of RM10.80: Net profit of RM1.1 billion in 3QFY11 (+2% quarter-on-quarter; +11% year-on-year) takes 9M11 earnings to RM3.3 billion (76% of our full year FY11F). Net interest income edged down 2% q-o-q due to net interest margin (NIM) compression (2.16% against 2.31% in 2QFY11) that was prevalent in all regions. Loans surged 7% q-o-q led by Singapore and Indonesia. Provisions fell sharply (-45% q-o-q) due to an improving loan portfolio, absence of some non-recurring allowances, and higher recoveries. Tier-1 and risk-weighted capital asset ratio stood at 11.6% and 14.1%, respectively (incorporating dividend reinvestment plan reinvestment rate of 91%).
Maybank has completed the acquisition of Kim Eng Holdings (KEH), it now owns 50.2%, and launched a mandatory general offer for the remaining shares. It also offered to buy out Kim Eng Securities (Thailand), currently 55.3%-owned by KEH, at 16 baht per share. We expect the privatisation to be successful. Strong revenue and loan traction at Bank Internasional Indonesia, MCB Bank Ltd and its Singapore operations should drive growth going forward. However, NIM is likely to remain soft, although overall asset quality should generally improve. There could be short-term pressure on PT Wahana Ottomitra Multiartha Tbk's (WOM Finance) motorcycle non-performing loans.
We raise FY11/13F loan growth to 15% to 18% (from 13% to 14%), reduce FY11 credit charge to 40 basis points (from 47bps), and imputed potential income (circa RM200 million) from Kim Eng in FY12/13F.
Maintain 'buy' and RM10.80 target price based on the Gordon Growth Model with the following assumptions: 16.5% return on equity, 7% growth and 10.8% cost of equity. ' HwangDBS Vickers Research, May 13
This article appeared in The Edge Financial Daily, May 16, 2011.
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