Company Name: AMMB HOLDINGS BHD
| Research House: HLG | Price Call: HOLD | Target Price: 6.45 |
Banking (OVERWEIGHT)
Indonesia ' No Ownership Cap / Aabar To Sell RHB Cap?
'''' News #1 ' Indonesia will not implement a planned regulation to limit ownership in domestic banks.
'''' News #2 - Aabar (owns 25% in RHB Cap) is exploring the sale of its stake with Sumitomo Mitsui Banking Carp.''
'''' News #1 would improve sentiment on both CIMB and Maybank, especially the former.''
'''' However, there are no fundamental changes as Indonesia's original plan is difficult and will need time to implement.'' Thus, no changes to our forecasts for CIMB and Maybank as we have not factored in any changes in stakes.
'''' It will clear the path for RHB Cap and Affin to re-commence their proposed acquisitions. The impact will be more positive for RHB Cap as it will help to achieve its aspiration of 5-10% international earnings contributions.
'''' News #2 likely to re-ignite merger speculation in RHB Cap as Aabar is unlikely to part with its stake below its entry cost of RM10.80.
'''' Maintain Overweight.
'''' While the latest news has no fundamental impact, we believe they could ignite trading interest in banks given that the sector has generally been lagging behind the market.'' ''We are not changing our top picks of Maybank and AFG.'' However, we believe that re-emergence of trading interest will be focus on CIMB and RHB Cap.
''
AMMB Holdings (HOLD)
Lower FY13-14 KPIs ' Pressure On Top Line
'''' 9MFY12 results in line with HLIB and consensus.''
'''' 3QFY12 results were characterized by continued improvement in NIM and lower loan loss provision.'' The latter help sustain yoy profit growth.''''
'''' FY12 KPIs was maintained.''
'''' However, FY13-14 net profit growth and ROE KPIs were lowered as global economic downturn will exert pressure on revenue growth rather than deterioration in asset quality.
'''' It maintains that asset quality (which continued to improve) will be intact.'' Internal stress tests show it is able to absorb the potential extreme trauma.
'''' Capital ratios well positioned for BNM's guidelines on BASEL III, no impact on dividend policy of 40-50% payout.''
'''' Despite new lending guidelines, it is confident of own position and has not seen material impact at the moment.
'''' Despite new lending guidelines, it is confident of own position and has not seen material impact at the moment.
'''' Maintain Hold.
'''' Target price unchanged at RM6.45 based on Gordon Growth (ROE of 13.7% and WACC of 10.5%).
''
KLCI: More sideways consolidation''
'''' We remain cautiously optimistic of KLCI resuming its uptrend after a mild profit taking consolidation as hourly chart is showing signs of bottoming up (FIG#2).
'''' If the KLCI is able to sustain its posture above last week's high of 1565 pts for the next 2-3 days amid heavy deliveries following last week's average daily volume of 3.7bn shares, then the index is likely to retest our envisaged resistance targets near 1570-1580. Supports are 1561 (5-d SMA), 1550 and 1544 (10-d SMA).
AFG: Getting oversold''''''
'''' We advocate buy on weakness as the daily chart momentum and trend indicators are getting oversold (FIG#4) whilst the hourly chart indicators are showing signs of bottoming up (FIG#5). Hence, after a brief profit taking consolidation, AFG could test higher grounds to RM3.88 (mid Bollinger band) and RM3.99 (upper Bollinger band).
'''' A more bullish outlook would only appear if AFG manages to close consistently above the Immediate supports are mid Bollinger band. The next upside targets is RM4.05. ''RM3.66 (38.2% FR) and RM3.54 (50% FR). Cut loss below RM3.54.
''
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