RHB Cap (Hold) - Better FY12 Earnings Outlook

Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD

Research House: HLG

Price Call: HOLD

Target Price: 7.85

RHB Cap (Hold)

Better FY12 Earnings Outlook

• FY11 results in line with HLIB and consensus.
• Final div of 11.82 sen and single-tier 5.59 sen, FY11 30% payout in linewith unchanged policy and HLIB's projection
• Missed FY11 ROE KPI due to one-offs but management already gave earlywarning while asset quality as well as loans and deposits growth were ahead ofKPIs.
• FY12 KPI of >14% ROE (post acquisition of Mestika and RI).  HLIBROE projection is at the lower end. 
• Management assured that it has already made sufficient impairment forthe CLO exposure.
• We expect FY12 earnings enhancement from: 1) absence of the one-offs; 2)guidance of improving NIM; and 3) benefits of 400 new touch points to graduallyfilter through. 
• Mestika and OSK M&As slated for completion by1HFY12. 
• Raised FY12-13 forecasts by 10-11% (absence ofone-offs).
• Maintain Hold.
• Target price raised to RM7.85 based on Gordon Growthwith ROE of 14.5% and WACC of 11.4%, from RM7.37. 

Source: HLIB Research 29 Feb 2012