More Downside Risk Fuelled by Lower Recoveries

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: TA

Price Call: SELL

Target Price: 4.10

Appointment of Group Chief Executive Officer

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: TA

Price Call: SELL

Target Price: 4.35

SME bright spot amidst slowing overall loan momentum

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 5.00

AFG- CI ratio likely to trend lower in coming quarters of FY15

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.70

AFG - New CA requirement of 1.2% to cause a drop in CET1 ratio

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.80

AFG - Loans Growth Sustainable in FY14

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: TA

Price Call: SELL

Target Price: 4.60

Alliance Financial Group - Non interest income boosted by bancassurance fee of RM30m

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.80

No material impact to earnings from goodwill payment

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.50

Tie up with Manulife Insurance Bhd

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: TA

Price Call: SELL

Target Price: 4.60

Non interest income boosted by sale of associate

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.50

Affin downgrades Alliance Financial Group

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: AFFIN

Price Call: SELL

Target Price: 4.78

Affin Investment Bank downgraded Alliance Financial Group to 'reduce' from 'add', saying the stock's recent gains have hurt its valuations.

The investment bank left its target price for the stock unchanged at RM4.78 per share, adding that the group's prospects remain intact.

Alliance Financial shares were trading up 0.6 per cent at RM5, while the benchmark composite index was up 0.33 per cent at 1793.44.-- Reuters

Capital ratios and net profit (PATAMI) expected to improve post disposal

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: BUY

Target Price: 4.50

Tougher challenges for SME lending

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.20

Alliance Financial upgraded to 'buy'

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: HLG

Price Call: BUY

Target Price: 4.53

Hong Leong Investment Bank (HLIB) Research upgraded Alliance Financial Group Bhd to "buy" from "hold", after the company said it plans to dispose of a subsidiary.

Alliance Financial will sell its 70 percent stake in Alliance Investment Management Bhd (AIMB) for RM12.3 million, pending approval from the Securities Commission, the company said on Tuesday.

The stake in AIMB will be sold to Abu Talib Othman, who currently owns the remaining 30 percent.

Hong Leong said the sale would allow Alliance to focus on marketing other wealth management products and boost sales.

AIMB's revenue rose 11.1 percent to RM2.1 million last year, when it had RM2.3 billion in assets under management.

Alliance has also demonstrated strong asset quality and positive results from its new business strategies, the research house said. It said the stock has fallen 6.5 percent since Aug.
16, although the prospects have improved since then.

"Given that the potential upside is over 10 percent now, along with the expectation of a 4 percent dividend yield, we are compelled to upgrade our rating to 'buy'," Hong Leong said.

It maintained a fair value of RM4.53 for Alliance, which was trading at RM4.02. -- Reuters

Minimal impact from adoption of MFRS139

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: HOLD

Target Price: 4.20

RHB Research - Banking Sector Update

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD

Research House: RHB

Price Call: BUY

Target Price: 16.07

Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD

Research House: RHB

Price Call: BUY

Target Price: 10.11

Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD

Research House: RHB

Price Call: HOLD

Target Price: 8.05

Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 6.75

Stock Name: AFFIN
Company Name: AFFIN HOLDINGS BHD

Research House: RHB

Price Call: HOLD

Target Price: 3.33

Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD

Research House: RHB

Price Call: SELL

Target Price: 12.11

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: RHB

Price Call: SELL

Target Price: 3.85

Sector Update

Banks ' Feb '12 system data ' Leading indicators for households improved mom                    Neutral

Sector Update

Public Bank ' Fair value at RM16.07 (from RM15.00)                                                     Outperform

Maybank ' Fair value at RM10.11 (from RM9.44)                                                           Outperform

CIMB ' Fair value at RM8.05 (from RM7.47)                                                            Market Perform

AMMB ' Fair value at RM6.75 (from RM6.23)                                                           Market Perform

Affin ' Fair value at RM3.33 (from RM3.16)                                           Market Perform (Upgraded)

HL Bank ' Fair value at RM12.11 (from RM11.18)                                                      Underperform

AFG ' Fair value at RM3.85 (from RM3.69)                                                                Underperform

MBSB ' Fair value at RM2.46 (from RM2.34)                                                           Market Perform

RCE ' Fair value at RM0.57                                                                                    Market Perform

-          Feb '12 system loan growth moderated further to +11.9% yoy but was up 0.4% mom, as compared to Jan '12 loan growth of +12.1% yoy/-0.2% mom. Loan growth for both businesses and households moderated further to 11.7% yoy and 12.1% yoy, from 11.8% yoy and 12.3% yoy respectively in Jan '12.

-          We raised our benchmark PER to 15x from 14x, which broadly lifts our fair value estimates for our coverage by 4-10%. However, our Neutral stance is unchanged with Maybank and Public Bank as our top picks for the sector.

 

Source: RHB Research - 2 April 2012

DBS obtains approval to commence M&A talks

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: AMMB

Price Call: BUY

Target Price: 4.40

Banking - NEUTRAL - 28 March 2012

Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD

Research House: KENANGA

Price Call: BUY

Target Price: 9.60

Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD

Research House: KENANGA

Price Call: HOLD

Target Price: 7.90

Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD

Research House: KENANGA

Price Call: BUY

Target Price: 10.40

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD

Research House: KENANGA

Price Call: BUY

Target Price: 15.50

Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 6.70

Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 10.90

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 3.70

The banking sector has moved back towards its fair valueover last three months and in our view, can no longer simply be argued as'being cheap'. Following the recent reporting season, our picks for the sectorhave changed for 2Q2012. We continue to like banks with M&As newsflows aswell as those supported by reasonable valuations. Under this strategy, we likeRHBCAP (OP, TP: RM9.60) and CIMB (MP, TP: RM7.90). MAYBANK (OP, TP: RM10.40)and PBBANK (OP, TP: RM15.50) also remain on our OUTPERFORM ratings as the twooffer reasonable dividend yields. We have however lowered our rating for AMMB(MP, TP: RM6.70) to a Market Perform from an Outperform due to its limitedupside from its current share price. Meanwhile, we are maintaining our MARKETPERFORM ratings on HLBBANK (MP, TP:RM10.90) and AFG (MP, TP:RM3.70) onvaluations ground.

The 4Q11 result trend and outlook saw the banking sectorposting a flat QoQ earnings (1.0%) with underlying profit growth momentumclearly having stalled. Going forward, there are limited opportunities to drivethe sector earnings growth materially beyond our current expectation of a high singledigit growth, given the on-going margin headwind and limited credit chargedsurprise.  The 4Q11 reporting period wasalso somewhat uninspiring for the market. Apart from the decline in capitalmarket revenues, in our view, the flat quarterly profit growth through 2011 wasactually due to the lack of policy rate rises. Non-interest incomes continue toexperienced a material decline (-7.3% YoY). We also expect softer tradingcondition to persist in the short term due to the ongoing global economicuncertainties. 

Margins emerging signs of softness without any furtherinterest rate hike (-11bps YoY, on average). We believe the margins willcontinue to face a modest headwind in 2012. Credit demand was strong however (11-15% on average vis-''-vis nominalGDP growth of 5.0%) despite the weak external outlook. Going forward, we areforecasting just a low teens credit growth to be driven by the start of theETPrelated projects.  Provisioning on newimpaired assets has been reduced but the credit charge is already low. Capitalin the sector remains strong (Industry T-1 Cap Ratio of 12.0% and RWCR of15.9%) ' which is well positioned for Basel 3. This include PBBANK (CCR: 10.7%RWCR: 15.9%) that was previously deemed as being under-capitalised.  Going forward, the capital ratio is expectedto remain healthy in supporting lending growth.

Earnings growth islimited.  Given our view thatresponsible finance will promote a healthy household lending growth, momentumof the loan growth will hence be lower for a period. As such, our base case forthe system loan growth is broadly in the low teens only.  Together with theon-going margin headwinds and limited provisioning surprise, there are limitedopportunities to drive the sector's earnings growth materially beyond ourcurrent expectations of high single digit.  

Current valuations.  Current valuations of the sector have gone upand the upside from here seems tight after rising 18% as measured by the KLFinancial Index from the October 2011's low. With earnings growth in the rangeof high single-digit to low teens, together with the already tight valuation,we

believe valuation multiple expansions are thus unlikely.Hence, we are increasingly looking to other factors to drive our rating recommendationssuch as M&As opportunities instead of organic growth.

The major bank valuations are 'at the middle of the ranger'of their historical mean valuations, which has typically represented their'fair values' and this will also somewhat cap their absolute performance apart fromthe current uncertain external economic outlook.  

To ride on 2Q2012news flows. For stocks, although our Target Price for RHBCAP has beenreduced (due to relative weak earnings), its discount valuation remainssupported by better growth prospects for the year ahead from its potentialmerger with OSK. Following the reporting season and the strong rebound of a fewanchor banks from their October 2011's low i.e. MAYBANK (+5%), PBBANK (+8%), AMMB(+2%), our pecking order has now changed to 1) RHBCAP and 2) CIMB withpotential M&A news flows to rerate these stocks' valuations. Meanwhile,thus far, the foreign shareholding of CIMB is still at its 18-month low despitethe increasing foreign net buying on Bursa Malaysia.

Source: Kenanga 

Flat sequential earnings albeit accelerated loans growth

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: MIDF

Price Call: BUY

Target Price: 4.10

HwangDBS Equity Research - 22 February 2012

Stock Name: AFG
Company Name: ALLIANCE FINANCIAL GROUP BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 4.50

Stock Name: MHB
Company Name: MALAYSIA MARINE AND HEAVY ENG

Research House: HWANGDBS

Price Call: SELL

Target Price: 4.75

Stock Name: NOTION
Company Name: NOTION VTEC BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 2.80

Alliance Financial Group; Buy; RM3.75
Price Target: RM4.50 (Prev: RM4.30); AFG MK
Boost from non-interest income
 
3Q12/9M12 results beat our and consensus expectations, led by robust non-interest income and loan
recoveries. Raised FY12-14F EPS by 6-10% on stronger loan and deposit growth, and non-interest income. Maintain Buy; raised TP to RM4.50.


Malaysia Marine & Heavy Engineering; Fully Valued; RM5.51Price Target: RM4.75 (Prev: RM5.00); MMHE MK
Persistent poor earnings

4Q11 earnings were below expectations. Cut FY12/13F earnings by 6%/12%. Maintain Fully Valued with revised RM4.75 TP.




Notion VTec; Buy; RM2.10Price Target: RM2.80 (Prev: RM2.10); NVB MK
A rosy outlook
2012-13 likely to see upside; FY12-14F earnings raised by 14-31%. HDD may benefit from gloomy SSD news. Maintain Buy; TP lifted to RM2.80 (8x CY12 EPS).


 
Jobstreet Corp; Hold; RM2.20Price Target: RM2.40; JOBS MK
Decent sales but tight margins
4Q11 net profit of RM7.5m was below expectations; declared DPS of 2.25 sen. Steady recruitment activities but tighter margins from higher operating costs. Maintain Hold with DCF-based TP of RM2.40.





Malaysia Airports; Hold; RM5.78Price Target: RM6.70; MAHB MK
Result in line

4Q11 core earnings grew 6% q-o-q to RM123m, within expectations; driven by 11% passenger growth.
EBITDA margin fell 3.2 ppts to 28.4%. Maintain Hold and SOP-based RM6.70 TP.