Stock Name: BIMB
Company Name: BIMB HOLDINGS BHD
BIMB Holdings Berhad
(June 23, RM1.85)
Initiate coverage at RM1.73 with buy call and target price of RM2.40: Bank Islam, which contributes the bulk (circa 88%) of BIMB's income, delivered impressive earnings improvement in FY10 ended December following its turnaround plan. BIMB's annualised pre-provision profit grew 27% led by robust financing and current account/savings account growth, while net financing margin and asset quality had improved significantly. Given robust domestic consumer spending, BIMB's traction is sustainable. We forecast 24% to 30% earnings growth in FY11/12F, driven by 16% financing growth and improving fee-based income.
On its own, Bank Islam can ride on the untapped potential in Islamic finance in the country, in line with the government's vision to develop Malaysia into an international hub for Islamic finance. Bank Islam, with its experience and expertise in Islamic finance could help other banks (domestic and abroad) to build and expand their Islamic banking and capital markets.
This could be done via a merger, acquisition or strategic stake, like its 20% investment in Amana Bank Ltd, Sri Lanka. Mergers and acquisitions could strengthen Bank Islam's size and market share and create scale for future growth.
Our RM2.40 target price (TP) is based on the Gordon Growth Model and assumes 4% long-term growth rate, 10.3% cost of equity, and 13% return on equity. Key catalysts are: (i) earnings turnaround and sustainability; and (ii) untapped potential in Islamic finance in Malaysia and Asean region. BIMB is currently trading at one times FY11 book value and our RM2.40 TP implies 1.4 times. ' HwangDBS Vickers Research, June 23
This article appeared in The Edge Financial Daily, June 24, 2011.
Company Name: BIMB HOLDINGS BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 2.40 |
BIMB Holdings Berhad
(June 23, RM1.85)
Initiate coverage at RM1.73 with buy call and target price of RM2.40: Bank Islam, which contributes the bulk (circa 88%) of BIMB's income, delivered impressive earnings improvement in FY10 ended December following its turnaround plan. BIMB's annualised pre-provision profit grew 27% led by robust financing and current account/savings account growth, while net financing margin and asset quality had improved significantly. Given robust domestic consumer spending, BIMB's traction is sustainable. We forecast 24% to 30% earnings growth in FY11/12F, driven by 16% financing growth and improving fee-based income.
On its own, Bank Islam can ride on the untapped potential in Islamic finance in the country, in line with the government's vision to develop Malaysia into an international hub for Islamic finance. Bank Islam, with its experience and expertise in Islamic finance could help other banks (domestic and abroad) to build and expand their Islamic banking and capital markets.
This could be done via a merger, acquisition or strategic stake, like its 20% investment in Amana Bank Ltd, Sri Lanka. Mergers and acquisitions could strengthen Bank Islam's size and market share and create scale for future growth.
Our RM2.40 target price (TP) is based on the Gordon Growth Model and assumes 4% long-term growth rate, 10.3% cost of equity, and 13% return on equity. Key catalysts are: (i) earnings turnaround and sustainability; and (ii) untapped potential in Islamic finance in Malaysia and Asean region. BIMB is currently trading at one times FY11 book value and our RM2.40 TP implies 1.4 times. ' HwangDBS Vickers Research, June 23
This article appeared in The Edge Financial Daily, June 24, 2011.
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