Banking Sector - 5 Preferred Banks

Banks cutting loan growth projection
■ Gross impaired loan ratio remained stable at 1.65% in Sep-Oct 16.
■ Loan growth recovered from 4.2% yoy in Sep 16 to 4.5% yoy in Oct 16.
■ We lower our projected loan growth for 2016 from 6-7% to 5.6% and introduce our
loan growth forecast of 5-6% for 2017.
■ Loan application rebounded strongly with a mom growth of 14.4% in Oct 16.
■ Stay Overweight on banks given the attractive valuations and better prospects in
2017.

Preference for the sector.
Stock-wise, we prefer the following banks for exposure to the sector:

■ BIMB Holdings – BIMB Holdings is our top pick among Malaysian banks as it will be the only beneficiary of EPF’s Simpanan Shariah, to be implemented in 2017 and would increase the inflow of Islamic funds. BIMB is the only listed pure Islamic bank in Malaysia.

The qualities of the stock are reflected by: (1) its unrivalled loan growth, (2) one of the best ROEs in the sector, (3) strong asset quality – one of the lowest gross impaired loan ratios among local banks, and (4) swift expansion of non-fund based income, primarily theTakaful income.

■ RHB Bank – RHB Bank is an Add in our books given the potential re-rating catalysts of: (1) benefits from the implementation of its IGNITE 17 transformation programme, (2) attractive valuation, (3) cost savings from its career transition scheme materialising from FY16 onwards, (4) gains in market share by its investment banking unit, and (5) the drive for regional expansion in the longer term.

■ Maybank – We like Maybank for its size and well-diversified business portfolio. In Malaysia, it is ranked among the top three in almost all the key market segments, including trade finance, credit cards, investment banking and Islamic banking. Its geographical diversification, with exposure to underpenetrated markets, such as Indonesia and the Philippines, also helps to support its earnings growth in the longer term. The potential re-rating catalysts for the stock are: (1) benefits from the regionalisation of its businesses in various countries, (2) the recovery in earnings contribution from its Indonesia operations, and (3) potential regional expansion of its Islamic banking and insurance businesses in the longer term.

■  AMMB Holdings – We reiterate our Add recommendation on AMMB Holdings as we expect EPS growth to turn around from a 25.8% decline in FY3/16 to an increase of 3.3% in FY3/17. Other potential re-rating catalysts for the stock include: (1) attractive valuations (CY17F P/E of 9x and P/BV of 0.8x), and (2) enticing dividend yields of 4-5% in CY17F.

■ Affin Holdings – We still rate Affin an Add given its attractive valuations with CY17F P/E of 7.7x and P/BV of 0.5x. In addition, we are positive on the implementation of its Affinity transformation programme, which would yield positive results in the areas of fee income generation, operating efficiency as well as margins.

Management also has aggressive targets of increasing the bank’s ROE by 2-3% pts by 2020 and doubling the bank’s 2015 operating revenue by 2020. This reflects management’s commitments to significantly improve the financial performance of Affin Bank and also its positive views on the impact from the transformation programme.

source: CIMB Research – 01/12/16

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Malaysia’s Banking Stocks

■ Gross impaired loan ratio inched down by 2bp mom to 1.66% in Aug 16.
■ Loan growth eased further from 5.1% yoy in Jul 16 to 4.2% yoy in Aug 16.
■ The drag on loan growth came from further deceleration in the momentum for business loan from 3.7% yoy in Jul 16 to a mere 1.9% yoy in Aug 16.
■ There was an improvement in the leading loan indicators in Aug 16, compared to an 18-20% yoy plunge in Jul 16.
■ Stay Overweight on banks given attractive valuations and better prospects in 2017.

An unexpected mom decline in GIL…
Despite the market’s ongoing concern about deterioration in banks’ asset quality, the industry’s gross impaired loan (GIL) unexpectedly fell 1.2% mom to RM24.4bn (US$6bn) in Aug 16. This helped to marginally reduce the GIL ratio from 1.68% in Jul 16 to 1.66%
in Aug 16 and increased the loan loss coverage from 88.7% in Jul 16 to 89.6% in Aug 16. In view of the benign YTD trend, we think that the GIL ratio would not be significantly above our projected 1.8% by end-2016.

…but loan growth still heading south
The industry’s loan growth continued to soften, from 5.1% yoy in Jul 16 to a dismal 4.2% yoy in Aug 16, the worst since May 03. The culprit was the unexpected further deceleration in business loan growth from 3.7% yoy in Jul 16 to a mere 1.9% yoy in Aug 16 but we are positive on the sustained pace of 5.7% yoy for the consumer loan momentum. We expect loan growth to recover towards year end due to the potential stimulus from the rate cut. We are projecting 6-7% loan growth for 2016.

Growth in residential mortgages stabilised
Following the downtrend in the past nine months, the growth in residential mortgages, the biggest loan segment with a 31% share of the industry’s total loan in Aug 16, stabilised at 10.1% yoy in Jul-Aug 16. Meanwhile, the business loan momentum was dragged down by the wider contraction of 4.7% yoy for manufacturing loans in Aug 16, vs. a decline of 2.5% yoy in Jul 16. Also, almost all the business loan segments registered weaker growth in Aug 16.

Improvement in the leading loan indicators
We are positive on the strong 19-21% mom recovery in the leading loan indicators in Aug 16. This led to an improvement in the yoy trend – the decline in applications narrowed from 18% yoy in Jul 16 to 1.6% yoy in Aug 16 while approvals inched up by 0.2% yoy in Aug 16 compared to a 19.4% yoy plunge in Jul 16. The improvement mainly came from the better performance in the residential mortgages and auto loan segments.

Maintain sector Overweight
We are encouraged that banks’ GIL ratio remained tame YTD Aug 16, easing concerns of a further increase in credit costs in 2H16. Overall, we remain Overweight on banks, predicated on the attractive valuation and the expected recovery in EPS growth in 2017.

The downside risks for our sector call would be a steep increase in GIL and further deterioration in loan growth. We recently replaced RHB Bank with BIMB as the top pick for the sector.

Aug 16 tracker – an unexpected mom decline in impaired loans

Preference for the sector
Stock-wise, we prefer the following banks for exposure to the sector:
BIMB Holdings – BIMB Holdings is our top pick for the sector as among the Malaysian banks, it will be the only beneficiary of the implementation of EPF’s Simpanan Shariah in 2017, which would increase the inflow of Islamic funds. BIMB is the only listed pure Islamic bank in Malaysia.
The qualities of the stock are reflected by (1) its unrivalled loan growth, (2) one of the best ROE in the sector, (3) strong asset quality – the third lowest gross impaired loan ratio and highest loan loss coverage among the local banks, and (4) swift expansion of non-fund based income,
primarily from the Takaful income.

RHB Bank – RHB Bank is an Add in our books given the potential rerating catalysts of: (1) benefits from the implementation of the IGNITE 17 transformation programme, (2) attractive valuation, (3) cost savings from the career transition scheme materialising from FY16 onwards, (4) gains in market share by its investment banking unit, and (5) the drive for regional expansion in the longer term.

Maybank – We like Maybank for its size and well-diversified business portfolio. In Malaysia, it is ranked among the top three in almost all the key market segments, including trade finance, credit cards, investment banking and Islamic banking. Its geographical diversification, with exposure to underpenetrated markets, such as Indonesia and the Philippines, also helps to support its earnings growth in the longer term.

The potential re-rating catalysts for the stock are: (1) benefits from the regionalisation of its businesses in various countries, (2) the recovery in earnings contribution from its Indonesia operations, and (3) potential regional expansion of its Islamic banking and insurance businesses in the longer term.

AMMB Holdings – We reiterate our Add recommendation on AMMB Holdings as we expect EPS growth to turn around from a 25.8% decline in FY3/16 to an increase of 3.3% in FY3/17. Other potential re-rating catalysts for the stock include: (1) attractive valuations (FY18F P/E of 9x
and P/BV of 0.8x), and (2) enticing dividend yields of 4-5% in CY16.

Affin Holdings – We still rate Affin an Add given the potential re-rating catalyst of an expected recovery in EPS growth in FY16, arising from the anticipated improvement in loan loss provisioning. According to management, the chunky provisioning for project financing loans in 2015 will not recur in 2016. As such, management guides for a significant improvement in the credit charge-off rate from 44bp in 2015 to only 20bp in 2016. Valuations are attractive, in our view, at FY17F P/E of 7.6x and P/BV of 0.5x.

source: CIMB Research – 30/09/2016

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MAYBANK - Grossly Oversold And Ripe For A Technical Rebound

MALAYAN BANKING BHD Stock Code 1155

HLIB Institutional Research has a BUY rating on MAYBANK with target price of RM10.27, or 24.2% upside. MAYBANK remains our top proxy pick for banking sector as it offers resilient growth prospects (FY14-17 core earnings CAGR of 5%) at decent valuations of 11.2x and 10.2x FY16-17 P/E (vs. 10-year average 11.6x). Moreover, dividend yield is attractive at 6.8% for FY16, which is 139% higher than its average peers’ 2.8%. We believe such valuations have provided a sufficient margin of safety and cushion further sharp share price decline, supported by grossly oversold daily indicators.

Grossly oversold. From YTD high of RM9.45 on 24 Apr, MAYBANK’s share prices tumbled 13.4% to a low of RM8.18 on 18 Aug before closing at RM8.27 yesterday, in tandem with the broader market consolidation amid external and internal headwinds.

Momentum should pick up once MAYBAK’s s hare price is able to reclaim above the lower uptrend channel near RM8.48 (also 23.8% FR). A decisive breakout above RM8.48 bodes well for the stock to advance higher to more formidable resistances at RM8.66 (38.2% FR) and our long term objective of RM8.87 (200- d SMA). Cut loss at RM7.93 (3 sen below 17 Dec low of RM7.96).

Source: Hong Leong Investment Bank Research 03/10/2015

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Maybank Should Attract Buyer On Weakness

MALAYAN BANKING BHD  Stock Code: 1155

Technical Comments:
Maybank should attract buyers on further weakness towards RM8.40 or the 17/12/14 low (RM8.25), with stronger support at RM8.00, prior to an oversold rebound towards the 23.6%FR (RM8.71), with next hurdle seen at the 38.2FR 9.00). Similarly, Sime Darby is attractive to buy on further sell-off towards the 11/8/15 low (RM8.01), RM7.80

by TA Securities

MALAYAN BANKING BERHAD
The Bank's main activities are commercial banking investment banking Islamic banking offshore banking leasing and hire purchase insurance factoring trustee services asset management stock broking nominee services venture capital and Internet banking.

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Banking Sector: S&P Cuts CIMB, AmBank and RHB Bank’s Outlook

Reduced to “negative”

According  to  media  sources,  Standard  &  Poor’s  (S&P) has  downgraded  the  outlook  for CIMB Group Holdings Bhd, AmBank (M) Bhd, RHB Bank Bhd and RHB Investment Bank Bhd.  The  outlook  has  been  revised  to  “negative”  from  “stable.”  Credit  ratings  are maintained  at  BBB-  for  CIMB  Group  and  BBB+  for  AmBank,  RHB  Bank  and  RHB Investment.  Meanwhile,  the  long-term  Asean  regional scale  rating  on  CIMB  Group  has been reduced to axBBB+ from axA.

The  ratings  agency  cited  prolonged  run-up  in  housing  prices  and  household  debt  level posing  potential  exposure  to  economic  imbalances  as reasons  for  the  downgrade.  “The negative outlook recognises the potential for deterioration in the banks’ asset quality and financial  profile  if  the  consumer  debt  burden  proves  excessive  in  an  unfavourable economic scenario,” S&P said in a statement.

Downgrade in tandem with our neutral view on the sector
We  believe  the  downgrade  reaffirms  our  neutral  outlook  on  the  sector.  Our  recent downgrade  of  loans  growth, a  segment  which accounts for  close  to  60%  of  the  sector’s income is premised on BNM’s tightening policies and weak general sentiments. To recap, we forecast slower loans growth of 8.2% for 2014 from 9.6% expected for 2013. This will be  underpinned  by  a  7.6%  and  8.8%  increase  in  consumer  and  business  loans respectively  where  the  steeper  slowdown  in  consumer loans  is  attributed  to  recent measures introduced to curb household debt and reinin rising property prices.

Inflationary pressures puts asset quality at risk
In the meantime, we are also cautious on the outlook for the system’s asset quality. This is especially  so  given  expectations  of  inflationary  pressures  arising  from  higher  food  and energy  prices  along  with  further  subsidy  cuts  and  the  implementation  of  GST  in  2015. Expectations  of  an  increase  in  the  OPR  would  also  add  burden  to  already  dwindling disposable income. While guidance from banks suggest that asset quality remains healthy with  no  indications  of  systemic  risks  at  this  juncture,  we  do  not  foresee  any  material improvement as seen in the past 10 years where BNM reports stable and sound impaired loans ratio of 1.4% as at September 2013.

Further foreign sell down possible for CIMB
We believe this S&P downgrade will not bode well for banking stocks especially CIMB and AMMB given their high foreign shareholding levels. We note that cost to raise funds in the debt  market  would  also  increase.  Based  on  latest  data  provided  by  CIMB,  the  group’s foreign  shareholding  stood  at  30.8%  (excluding  Mitsubishi  UFJ  Financial  Group’s  5% stake).  This  is  the  lowest  point  since  August  2009. In  comparison,  the  group  achieved highest foreign shareholding level of 53.8% in June2007. Excluding ANZ’s 23.8% stake, AMMB also attracts sizeable foreign interest of around 34%.

Valuation and recommendation

Going  forward,  we  do  not  envisage  any  major  catalysts  to  drive  growth  in  the  banking sector.  Earnings  growth  visibility  is  further  dampened  by  the  weak  global  macro backdrop.  Hence,  we  reiterate  our  NEUTRAL  stance  on the  banking  sector.  In  terms  of stock  picks,  we  have  BUY  calls  on  Maybank  and  Affin.  HOLD  AMMB.  Here,  we  take  the opportunity  to  downgrade  CIMB  from  buy  to  HOLD  premised  on  concerns  over  a potential  selldown  by  its  foreign  shareholders.  Furthermore,  we  note  that the  potential
upside from the stock’s last close has reduced to less than our 15% buy threshold. SELL maintained on RHB Cap, HLBB, Alliance Financial Group and PBB.

below: Peers Comparison (click to enlarge)

by: TA Securities

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Watch for Trading Opportunity – AFG

Alliance Financial Group Bhd (2488) Finance – RM5.06.

AFG  is  not  only  making  a  recovery,  but  is  on  the  rise  after  Wednesday’s  push  saw  the candle  taking  out  the  RM5.00  levels  as  well  as  the  short -term  wedge  formation.  Its momentum indicators shot up as a result of the upsurge and are still rising. Collectively, the above are positive signals and points to more short-term upsides.

For the time being, the RM5.20  level of RM5.28  will prove to be a formidable resistance to clear, but if it fails to clear, then the stock reverts to a neutral outlook. On the other hand, if it is cleared, then the stock is a trading buy. . The RM5.40  level will be next resistance level, before the top of the RM5.60 level comes into play.

by Mercury Securities

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BIMB – Short Term Trading Buy

BIMB –  RM 3.21  (Stock Code: 5258)  (Bloomberg Code: BIMB MK Equity)

Recommendation
BIMB made a minor daily Wave 4 low at MYR2.28 (on 21 May 2012) with grossly oversold and bullish signals. Due to its mostly positive chart signals, the indicators are pointing firmly to a move towards its resistance and upside target areas in the short to medium term.

SHORT-TERM BUY (TECHNICAL) on dips for BIMB, with very firm support areas at MYR2.92 and MYR3.21. The upside target areas are at MYR3.58, MYR4.17 and MYR4.57, with stop-loss at MYR2.90.

Below: BIMN Daily Chart  (click to enlarge)

BIMB Holdings Berhad (BIMB)  provides all aspects of Islamic banking services. Through its subsidiaries, it underwrites  family and general takaful (Islamic insurance) and provides stock -broking and other related services. It also has operations in unit trust management, provides training and consultancy services, and leases fixed assets to related companies.

by Maybank IB

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Maintain Buy On Maybank

Maybank; Buy; RM8.80 Price Target: RM10.60; MAY   
Maybank expects NIM compression

Maybank expects a contraction of 10 bps in the group’s net interest margin (NIM) in 2012. It cited price competition between banks as the reason as new loans secured at lower pricing has narrowed NIM. This is in line with our expectation as we have imputed 10bps decline in NIM in our FY12 forecasts. 

Separately, Maybank said that its exposure to the USD600m (c.RM1.8bn) unsecured funding facility on which Vietnam Shipbuilding Industry Group (Vinashin) has recently defaulted is minimal and insignificant. Maybank’s total assets as at Dec-11 stood at RM451bn and it has a loan loss coverage ratio of 87%.  

Maybank remains our top pick among the large cap Malaysian banks. Its dividend yield is appealing at c.6%, assuming a sustainable 70% payout ratio.  Apart from its improving domestic business, we believe that its long-term growth potential of its Indonesian operations remains a key re-rating catalyst. Maintain Buy and RM10.60 TP. 

by HWDBS

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Malaysia Banks: 4QCY11 results summary and review

Click to enlarge the table below:

Malaysia Banks: 4QCY11 results summary and review Note: Alliance Financial Group, AMMB and Hong Leong Bank’s forecasts refer to FY13 and FY14 Maybank changed its FYE from Jun to Dec; FY Dec 2011 represents 6 months result. Source: Company data; DBS Vickers

by HWDBS Vickers

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Maintain Buy For Maybank - Sustainable High Dividends

Current price: RM8.75 Maintain Buy, RM10.60 Target Price.

Sustainable high dividends
•  Strong transaction banking franchise will support non-interest income and ROE
•  Domestic engines buzzing; regional growth cranking up
•  Maintain Buy rating and RM10.60 TP; top pick for Malaysian banks

 
Less susceptible to capital market volatility. MAY’s strength is recurring fee income from its strong transaction banking segment. It is less susceptible to capital market weakness as over 50% of its non-interest income is recurring, mainly from transaction banking activities. MAY has an advantage, by leveraging on deposit franchise for transactional banking given its high CASA base (36% of total deposits; 42% for domestic (Malaysia-only) portion).
The inclusion of Kim Eng should raise investment banking income to 8% of total revenue (from 2%), by leveraging on its local capabilities and Kim Eng’s franchise. Key risks are integration and execution of mandates, which depend on market conditions. 

Growth intact. Singapore and Indonesian operations remain strong - loans grew 44.6% and 28.8% y-o-y, and contributed 14% and 6% to MAY’s pre-tax profit, respectively. 2012 KPIs include 15.6% ROE, 16.2% loan growth and 11.6% deposit growth. Integrated 5-year regional road map could see cost-to-income ratio being sticky in the near term.

Maintain Buy, RM10.60 TP. We like MAY as a defensive play. It offers the highest dividend yield in the sector. Our RM10.60 TP implies 2.3x FY12 BV, and is based on the Gordon Growth Model with 16% ROE, 7% growth and
10.8% cost of equity. MAY’s dividend yield is appealing at c.6%, assuming sustainable 70% payout ratio. It declared 36sen DPS (32sen applicable for DRP) for FY11, implying 80% net payout. The high payout is likely sustainable as we expect MAY to utilise its existing S108 tax credit
(RM1.95bn) before it expires in 2013.

by DBS Vickers Securities

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Malaysia Banking Sector Analysis Update

Sep 2011 statistics: Loans growth may peak soon
While YTD annualized loans growth inched up 24bps m-o-m to 13.4%, loans applications have fallen for 3 consecutive months, which suggests loans growth may
be peaking soon. On a brighter note, average lending rate spread is showing some stability indicating margin compression may have bottomed out. Maintain NEUTRAL on the banking sector as loans growth momentum wane in the months ahead. Hong Leong Bank is our top pick for the banking sector due to the latter’s transformation story to be a banking giant.

Loans growth may peak soon as loans applications fell 
  Loans growth gained momentum in September as YTD annualised growth increased 24bps m-o-m to 13.4%. However, lending indicators continued to show weakness as oans applications, approvals, and disbursement all fell m-o-m by 6.5%, 9.4% and 2.0% respectively. Loans applications, in particular, have fallen for 3 consecutive months to RM56.8bn, the lowest level since March 2011. These may suggest that loans growth may be peaking soon.
  While loans to the household sector (+12.5% y-o-y) remains the key driver of loans
growth, its share of credit expansion has shrunk from 68% in 2009 and 58% in 2010 to 51% in 9M11. On the other hand, loans to the business sector are picking up pace (+15.4% y-o-y) on the back of implementation of ETP projects. Deposits growth picked up pace but LDR still near 8-year high
  Deposits growth picked up pace growing by 2.8% m-o-m, outpacing loans growth of 1.2%. This resulted in loan-deposit ratio (LDR) and financing- deposit ratio declining
marginally to 81.9% (Aug: 82.9%) and 87.9% (Aug: 89.2%) respectively.   That said, LDR remains at elevated level which is near an 8-year high. ALR spread stabilizes but still near 14-year low
  Margins remain compressed in Sep although it is showing signs of bottoming out. BLR and average lending rate (ALR) remain constant m-o-m at 6.54% and 5.05% respectively while ALR-3 month fixed deposit spread is still near a 14-year low at 2.05% (Aug: 2.04%). Asset quality and capital ratios remain sound
  Asset quality remains healthy as impaired loan ratio declined 2bps m-o-m to 1.96%
while loan loss coverage moderated 51bps m-o-m to 95.9%.
  The banking system remained well-capitalised, with  the risk-weighted capital ratio
and core capital ratio at 14.6% and 12.5% respectively.

Maintain NEUTRAL
  We maintain our Neutral stance on the banking sector as loans growth momentum
wane in the months ahead.
  Hong Leong Bank is our top pick for the banking sector due to the  latter’s
transformation story to be a banking giant. 

by ECM Libra

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Malaysia Banking Sector stocks BUY Call by MIDF

Call on sector
We remain positive on the banking sector as the banks overall have continued to record good net profits for the quarter. Although not sparred by the external headwinds, we expect banks earnings to remain healthy underpinned by loan growth supported by projects under the Economic Transformation Programme (ETP), low
credit charge offs and an improved operating efficiencies via streamlining structures at banking groups. 

Our BUY calls are Maybank (TP: RM10.50), AMMB (TP: RM7.30) and CIMB (TP: RM9.00).
 
Maybank: The stocks trades at 1.95x P/BV to our forecast BV for FY12 which is still lower than its historical P/BV of 2.35x. Improving profit contribution from BII and asset quality of both domestic and overseas operations. Beneficiary of the key financing deals from the ETP projects. Leveraging on the platform of Kim Eng Securities to penetrate newer markets in the region and for investment banking deals. 

AMMB: Group’s effort to rebalance its loan portfolio to increase the composition mix of business/corporate loan portfolio to generate a higher growth in non-interest income and the support and knowledge enhancement from its key strategic partners have been positive thus far in generating stronger earnings. Impaired loan ratio has continued to trend downwards. 

CIMB:  Strong pipeline for IB deals and also on the ability to capitalize on ETP projects for financing. The strategic partnership and JVs established with other banks in newer markets as in Sri Lanka and India will be positive for cross border IB deals and financing. 

by MIDF 09 Sep 2011

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Malaysia Building Society (MBSB) Technical Analysis

Accumulate MBSB Towards RM1.38 For Longer-term Rally With A Chance For A Rebound In The Short Term

 above: MBSB Daily Chart (click to enlarge)

Technical Interpretations:
♦  Over the last one year, MBSB’s saw its share price consolidating within an ascending  triangle formation before breaking out on 21 Mar. Upon breaking out from the triangle formation, the bullish momentum drove the stock to a new high of RM1.72 before a correction saw its share price falling to a low of RM1.39 on 10 May. 
♦  The stock, however, found support at RM1.39 and resumed its uptrend to a high of RM1.72 on 26 May. Failing to breakthrough its previous high of RM1.72, the stock (which formed a double-top formation) saw a change in trend (from bullish to bearish) and corrected to a low of RM1.38 on 16 Jun.
♦  Nevertheless, the stock once again found support at RM1.38 to stage a technical rebound to close slightly below the 10-day SMA (RM1.424) at RM1.41  yesterday. Note that the stock saw a  relatively high trading volume of 3.3m shares yesterday. 
♦  Noticeably, the RSI remained flat at  41.106 pts (below its 50 pt resistance level) to suggest that buying momentum remained relatively weak in the immediate term. 
♦  In addition, the increasing divergence of the MACD line below the signal line (with both lines crossing into the negative region) indicates the prevailing bearish momentum and a negative outlook in the immediate term.
♦  Furthermore, the 10-day SMA (RM1.424) increases its divergence below the 40-day SMA (RM1.524) to further confirm a negative outlook in the short term.
♦  Nevertheless, the oversold indication of the Stochastic may imply a potential technical rebound in the immediate term (given that the stock had seen a sharp fall in its share price over the last few days).

Daily Trading Strategy:
♦  Overall, we expect MBSB’s share price to consolidate within the RM1.38-1.44 range in the medium term. Nevertheless, we do not rule out the possibility of a technical rebound taking place in the short term given the oversold indication of the  Stochastic (coupled with the proximity of  its share price to the crucial support of
RM1.38).
♦  In view of that, we advise investors to accumulate towards the immediate support of RM1.38 in anticipation of a longer-term rally towards the resistance of RM1.54 and RM1.64. In the event of a breakout above RM1.64, we expect the bullish momentum to drive the stock’s price towards its one-year high of RM1.72. 
♦  Note that, MBSB’s share price would need to remove its  immediate resistance of RM1.44 to turn its immediate outlook positive (and signal a potential revival of its upward rally), while the further breaching of the RM1.54 resistance would turn the overall outlook positive (and serve as a confirmation to the stock’s uptrend). 
♦  Aggressive investors may, however,  enter at yesterday’s close of RM1.41 for a bet on a possible technical rebound towards its immediate resistance of RM1.44 in  the short term and the 40-day SMA (RM1.524) in the medium term. 
♦  While we expect good support at RM1.38, breaching this level would turn its immediate outlook negative and lead to its share price falling to its next support of RM1.32. Note that a further breaching of RM1.32 would turn the overall outlook negative with the next support seen at a distant RM1.21. Hence, short-term investors should cut loss if the price breaches RM1.38 while medium-term investors may choose to cut loss below RM1.32.
♦  While we advise against any short-term play, we see a good risk to reward ratio for investors with an entry price of RM1.40 given that the upside to its immediate resistance of RM1.54 and RM1.64 is 14 sen and 24 sen respectively while the downside to its support of RM1.32 is capped at 8 sen. 

By RHB Research.

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Malaysia Building Society (MBSB) : A buy by AmResearch

MALAYSIA BUILDING SOCIETY BHD (stock code MBSB  1171
BUY  Price: RM2.55 (Ex-rights price: RM1.90) Fair Value: RM3.00 (Ex-rights price: RM2.20)  4 May 2011

MBSB trades ex-rights and warrants today

• Malaysia Building Society Bhd (MBSB) will trade ex-rights and warrants today. The entitlement date is 6 May 2011.
• Commencement of trading of provisional allotment of the rights shares and warrants starts from 9 May 2011. The last day for the sale of provisional allotment of the rights shares and warrants is on 13 May 2011
• The last day for receipt of acceptance of and applications for the rights and warrants is on 24 May 2011.
• The company is targeting to list the rights and warrants in early June 2011.
• MBSB is implementing the rights issue at RM1.00/rights share, on a five rights-for-every-seven shares basis.
• In addition, there will be one free warrant for one rights share, with the warrant exercise price fixed at RM1.00 each. The warrants are immediately detachable from the rights. The warrants’ expiry date is five years from the date of issue and exercisable anytime during the period.
• MBSB is expected to report its 1QFY11 results in the next two weeks. We believe there is a strong chance the annualized 1QFY11 will exceed our projected net earnings of RM195mil for FY11F. 
• We believe MBSB has already disbursed quite a significant amount of personal loans to date. The total amount disbursed to-date is likely to be close to the 60% amount disbursed in FY10. Thus, even if we are to take into account repayments, we believe there is plenty of room to upgrade our loans projections later should the momentum continue.  We maintain our BUY rating with a fair value of RM3.00 on a cum-basis or ex-basis of RM2.20/share.

 

above: click to enlarge

Source :  AmResearch  

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CIMB Stock Techincal Review

Current Active Stock Review – CIMB Stock Code 1023

Chart wise : Within upward channel …….
CIMB (1023 - MainBoard) had on 26/8/2010 traded higher to a day high of RM7.94 before settled
at RM7.92.

Above : CIMB Daily chart - click to enlarge 

Price Direction ….. 
In view of a decrease in market participation, the stock can be expected to trade sideways within the small upward channel  in coming day(s) with an overhead resistance pegged at RM8.10  and support at RM7.80. 

What to watch for …. 
A turnaround of prices to close below RM7.80 level would see a change in the stock direction for the immediate short term.

by Mercury Securities Sdn Bhd

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EONCAP stock code 5226

EON Capital (RM6.92; Hold; Price Target: RM7.30)
 
Lower overheads and taxes lift earnings
•  1Q10 net profit of RM97.8m (+59% q-o-q) was within our and market expectations
•  Net interest income inched up 1% q-o-q, but lower overheads (-15% q-o-q) and tax expense (-16% q-o-q) boosted net earnings
•  Maintain Hold and RM7.30 TP.

by HWDBS Vickers

EONCap Group is involved in commercial banking, merchant banking, finance company business and nominee and custodian services.

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Maintain Buy AEON Credit Service : HWDBS

Results Snapshots
AEON Credit Service (RM4.08; Buy; Price Target: RM4.60;
ACSM MK)
At a glance
•  4QFY10 net profit of RM14.3m brought full-year
earnings to RM54.3m; in line with our and market
expectations
•  Declared 12 sen final gross DPS
•  Maintain Buy with RM4.60 TP

source: HWDBS Vickers

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AFG (sock code 2488)

TRADING VIEW:  SELL ON RALLY  towards:  RM3.20/3.40 
Stop Loss:    Below RM2.70  (SL) 

above: click to enlarge

source: TA securities 

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RHBCAP RM7.30 target price

RHB Capital (RM5.98; Buy; Price Target: RM7.30; RHBC
MK)

Lagging the laggards
•  Laggard among Malaysian banks that offers solid value
proposition at 1.2x FY11F BV with c.15% ROE 
•  Beneficiary of interest rate hikes; every 25bps lifts
earnings by c.7% 
•  Maintain Buy, TP raised to RM7.30. RHB Cap is the
cheapest stock in our Malaysia large cap universe at 8x
forward PE 
source: HWDBS vickers

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EONCAP : MAINTAIN HOLD

EON Capital (RM7.05; Hold; Price Target: RM7.30; EON
MK)
Upping the ante
•  Hong Leong Bank revises offer to RM7.30. 
•  5 April remains as the deadline for offer
•  Maintain Hold, TP revised to RM7.30 at offer price
source: HwangDBS Vickers

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