RCE Capital: Maintain Hold - Results within; proposes bonus & rights

Stock Name: RCECAP
Company Name: RCE CAPITAL BHD

Research House: MAYBANK

Price Call: HOLD

Target Price: 0.45

Maintain Hold and target price. 9MFY12 results were in line with core net profit down 13% YoY as net loans contracted 18% YoY due to the ceasation of KOWAJA lending activities for 6+ months. A 1-for-2 bonus and 2-for-5 rights issue of new RCPS will raise shares liquidity and give RCE the capacity to grow. Nonetheless, the operating environment remains tough with net loans continuing to retrace 2% QoQ despite the resumption of KOWAJA lending activities since Jun 2011. Our target price continues to peg the stock to 0.8x historical P/B.

Maybank Research 15 Feb 2012

Click here for full report

RHBInvest Research Highlights 13th February 2012

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD

Research House: RHB

Price Call: BUY

Target Price: 15.00

Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD

Research House: RHB

Price Call: BUY

Target Price: 9.47

Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD

Research House: RHB

Price Call: HOLD

Target Price: 7.41

Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 6.23

Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD

Research House: RHB

Price Call: SELL

Target Price: 11.01

Stock Name: AFFIN
Company Name: AFFIN HOLDINGS BHD

Research House: RHB

Price Call: SELL

Target Price: 3.10

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: RHB

Price Call: SELL

Target Price: 3.56

Stock Name: MBSB
Company Name: MALAYSIA BUILDING SOCIETY BHD

Research House: RHB

Price Call: HOLD

Target Price: 2.32

Stock Name: RCECAP
Company Name: RCE CAPITAL BHD

Research House: RHB

Price Call: HOLD

Target Price: 0.57

13th February 2012

 

Malaysia Equities

Top Story

Banks ' Easing Headwinds + YTD Underperformance = Sector Upgrade              Neutral (Upgraded) Sector Update Public Bank ' Fair value at RM15.00 (from RM14.10)                                                     Outperform Maybank ' Fair value at RM9.47 (from RM7.33)                                          Outperform (upgraded) CIMB ' Fair value at RM7.41 (from RM6.20)                                          Market Perform (upgraded) AMMB ' Fair value at RM6.23 (from RM4.99)                                        Market Perform (upgraded) HL Bank ' Fair value at RM11.01 (from RM9.90)                                                        Underperform Affin ' Fair value at RM3.10 (from RM2.37)                                                                Underperform AFG ' Fair value at RM3.56 (from RM3.25)                                                                Underperform MBSB ' Fair value at RM2.32 (from RM1.95)                                                           Market Perform RCE ' Fair value at RM0.57 (from RM0.50)                                                              Market Perform

Sector Update

Plantation ' Only Time Can Resolve The Indonesian Tax Structure Problem                    Overweight Sector Update -          The seasonal decline in production continued in Jan as CPO production fell 13.8% mom. Exports fell by a slightly smaller 13.2% mom also due to seasonal factors, post-festive season. Despite the lower CPO stock levels, annualised stock/usage ratio rose to 11.1% (up from 10.5% in Dec), mainly due to the smaller export volume in Jan.

Corporate Highlights

SEG International ' No Signs of Slowing Down                                                            Outperform Visit Note -          The management expects total student population of 35k (vs. our previous assumptions of 37k) by end-2012, implying yoy growth of almost 30% from the current 27k.   Gamuda ' PDP Terms For Klang Valley MRT Announced                                        Market Perform Company Update -          The agreement between MRT Co and project delivery partner (PDP) for the Klang Valley MRT project MMC-Gamuda JV has been signed with key terms being: 1) The PDP will be paid a fee equivalent to 6% of total contract value; 2) If the actual project cost exceeds the target cost by up to 15%, the PDP fee will be reduced in accordance with an agreed formula; 3) The PDP will have to shoulder the balance if the actual project cost exceeds the target cost by 15%; and 4) The PDP is liable to a liquidated and ascertained damage (LAD) for late delivery of RM500,000/day.   MPHB ' Sells down stake in Associate, Philippine Racing Club                                       Outperform News Update -          MPHB has sold a 13.1% stake in Philippine Racing Club Inc. (PRCI) at an average price of Peso 9.50/share, for Peso 722.4m (RM51.64m). Post-disposal, MPHB will own 19.9% of PRCI, and will no longer equity account it as an associate. MPHB will record a dispoal gain of RM17.34m.   CSC Steel ' 4QFY12/11 in the red on inventory writedown                                             Trading Buy Results Note -          FY11 net profit exceeded our full-year forecast by 42%, but missed the full-year market consensus by 22%. The variance against our forecast largely came from a lower-than-expected writedown of inventories. CSC Steel also declared a 7sen single tier dividend (net yield of 4.9%).

Regional Equities

Indonesia Banks : Opportunity To Accumulate                                                             Overweight Sector Update Bank Rakyat ' Fair value IDR8,200                                                                               Outperform Bank Mandiri ' Fair value IDR7,900                                                                             Outperform BCA ' Fair value IDR7,500                                                                                     Market Perform Bank Danamon Fair value IDR5,500                                                                             Outperform

Macro

GDP ' Resilient GDP Growth In 4Q 2011, Odds Of An Upgrade Improving Economic Update (published 10 Feb 2012) -          The country's real GDP growth is estimated to have softened to 5.4% yoy in the 4Q, after bouncing back to +5.8% in the 3Q. The moderation in real GDP growth is expected to persist into 2012, due to global economic slowdown amidst a lingering sovereign debt crisis in the Eurozone.

 

RCE Capital (Hold): More challenges ahead

Stock Name: RCECAP
Company Name: RCE CAPITAL BHD

Research House: MAYBANK

Price Call: HOLD

Target Price: 0.45

Core earnings in line. RM54m 1HFY12 core net profit (-1% YoY) was 51% of our full-year forecast. We maintain our FY12 core net profit forecast but raise bottomline forecast to include a RM5.9m one-off gain. We lower FY13 forecast on slower-than-expected lending activities in FY12 todate. Recent central bank guidelines to rein on household debts, extended to lendings under the Cooperatives Commission's purview, may impact RCE. Our target price continues to peg the stock to 0.8x historical P/B amid these uncertainties. Hold at this juncture.

Maybank research (29 November 2011)

Click here for full report

RHBInvest Research Highlights 21st November 2011

Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD

Research House: RHB

Price Call: SELL

Target Price: 6.98

Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD

Research House: RHB

Price Call: SELL

Target Price: 5.63

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD

Research House: RHB

Price Call: BUY

Target Price: 12.54

Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD

Research House: RHB

Price Call: HOLD

Target Price: 9.70

Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD

Research House: RHB

Price Call: SELL

Target Price: 4.40

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: RHB

Price Call: SELL

Target Price: 2.83

Stock Name: AFFIN
Company Name: AFFIN HOLDINGS BHD

Research House: RHB

Price Call: SELL

Target Price: 2.05

Stock Name: MBSB
Company Name: MALAYSIA BUILDING SOCIETY BHD

Research House: RHB

Price Call: HOLD

Target Price: 1.62

Stock Name: RCECAP
Company Name: RCE CAPITAL BHD

Research House: RHB

Price Call: HOLD

Target Price: 0.50

21st November 2011

 

Top Story: WCT ' Still hopeful on RM2bn contract wins in FY12/11                Market Perform

Briefing Note

''       WCT is still not giving up hope on meeting its guidance of RM2bn worth of new contracts to be secured in FY12/11, despite having only bagged RM187m YTD.

 

Macro View

 

GDP: Real GDP bounced back strongly to +5.8% yoy in the 3Q, but outlook darkens

Economic Highlights (published 18 Nov)

''       Real GDP growth bounced back strongly to expand by 5.8% yoy in the 3Q, from +4.0% in the 2Q. This was boosted partly by significantly higher-than-expected public consumption and as industrial activities normalised after Japan 's earthquake disruption to supply chain receded. This was aided by an improvement in crude oil production, after a hiccup in the production of a major oil field was resolved in May. A pick-up in consumer spending also helped, while real export growth inched up moderately during the quarter.

 

Sector Call

 

Banks: Further measures to promote responsible financing practices            Underweight

Sector update

Maybank: Fair value at RM6.98                            Underperform

CIMB: Fair value at RM5.63                                   Underperform

Public Bank: Fair value at RM12.54                    Outperform

HL Bank: Fair value at RM9.70                             Market Perform

AMMB: Fair value at RM4.40                                 Underperform

AFG: Fair value at RM2.83                                     Underperform

Affin: Fair value at RM2.05                                     Underperform

MBSB: Fair value and call downgraded to RM1.62                     Market Perform (down from OP)

RCE: Fair value at RM0.50                                     Market Perform

 

Property: Riding through the storm                       Underweight

Sector Update

''       As expected, further regulations are imposed on household financing that will have an impact on the property sector.

 

Corporate Highlights

 

Parkson: PRG 3QCY12/11 results in line with expectations                  Outperform

Company Update

''       51.6% subsidiary, Parkson Retail Group (PRG)'s 9MCY12/11 core net profit of RMB842.1m (+14.8% yoy) was within expectations, accounting for 68% of our and consensus earnings forecasts, respectively. We consider this to be within expectations as the 4QCY12 is seasonally strongest for PRG, usually accounting for ~30% of full-year earnings due to the festive seasons and holidays.

 

MMHE: Saved by provision reversals                                Underperform

Briefing Note

''       Revenue was down due to: 1) change in recognition of the Turkmenistan Block 1 Phase 1 project to equity accounting (vs. consolidation previously) after the project was novated to the MMHE-TPGM JV; and 2) drop in work in both E&C and Marine Repair/Conversion divisions. Order book stands at RM3.7bn and tender book is RM4-5bn.

RCECAP - RCE Capital's fair value lifted, stock climbs

Stock Name: RCECAP
Company Name: RCE CAPITAL BHD
Research House: RHB

RCE Capital Bhd, a Malaysian consumer credit provider, rose the most in more than six months in Kuala Lumpur trading after RHB Research Institute Sdn Bhd raised its fair value for the stock to RM1.10.

Its shares climbed 6 per cent to 53 sen at 9:05 a.m. local time, set for their biggest increase since Nov. 22. -- Bloomberg

RCECAP - Kenanga lowers target price on RCE Cap

Stock Name: RCECAP
Company Name: RCE CAPITAL BHD
Research House: KENANGA

Kenanga Research has lowered the rating on RCE Capital to "hold" and the target price to RM0.56, believing the company's current business outlook for the lending to civil servants, remains challenging.

In a statement today, it said financial year 2012 would be the year for RCE to be on the defensive.

"That said, RCE's management and the Koperasi Wawasan Pekerja Pekerja Bhd(KOWAJA) should have the urgency to work closely with the Cooperatives Commission of Malaysia (CCM) towards resolution for a full compliance of the GP6 and GP7 (new guidelines).

"This is so that, the company is not at a point of seeing a negative impact, on the group's future profitability," Kenanga added.

It also lowered its financial year 2012/2013 forecasts by 16.2 per cent/16 per cent respectively.

"Our revised financial year 2012/2013 net profit estimates are four per cent/14 per cent respectively below consensus," it said.

Kenanga cut its target price from RM1.10 previously to RM0.56, representing four times the financial year ending 2011 price earnings ratio, and lowered the rating from "buy" to "hold".

The research house explained that further hard work is needed before RCE can start disbursing loans, as well as cutting its product pricing, which it thinks is the main hurdle to securing the full compliance status. -- Bernama