Maybank IB Views

Tuesday, October 4, 2011

Public Bank RM12.16: Hold
Resilience on a relative basis

Hold maintained. Our earnings are lowered by 6-7% for 2012/13, while our TP is lowered to RM12.30 from RM14.10 on a lower 2012 P/B target of 2.5x vs. 2.8x, in line with lower peer valuations. On a relative basis, nevertheless, we expect Public Bank's earnings to be resilient due to strong asset quality, while share price should be supported by a) decent gross dividend yields of 5+% and b) low foreign shareholding.

Banking: Neutral
Cautious expectations

Maintain Neutral. While loan growth continues to be robust, there is approximately a 6-month lag between loan growth and GDP growth, by our estimates. In light of slower economic momentum ahead, our loan growth forecast of 12.4% this year is maintained, but lowered to 9.4% from 10.4% for 2012. Forward earnings for the banks in our coverage have been trimmed also on the back of lower non-interest income (NII) assumptions. We now project slower aggregate net profit growth of 4.3% in 2012 for banks in our universe (+9.9% previously).

The FBM KLCI fell 19.61-points to close at 1,367.52 yesterday. Its resistance areas of 1,367 and 1,403 will cap market gains, whilst the weaker support areas are located at 1,310 and 1,353. Due to the US markets’ weaker tone last night, we may see a volatile tone for the index today.

Trading idea is a Take Profit call on RHBCAP
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Other Local News
SP Setia: Buys land for RM381m. SP Setia Bhd has proposed to acquire land for RM381.2m to replicate its successful township development in Setia Alam and Setia Eco Park. The new land in Rinching, which is 673.3 acres and situated mid-way between Semenyih and Bangi old town, is forecast to have a gross development value (GDV) of RM4b. (Source: Bursa Malaysia)

KNM: Octagon awards contract to KNM. Octagon Consolidated Bhd has awarded a USD22m (RM70.2m) contract to KNM Group Bhd to manufacture an advanced thermal gasification reactor in Sri Lanka. KNM has also been shortlisted as one of the contractors for the engineering, procurement, construction and commissioning (EPCC) contract for the waste to energy plant in Colombo, Sri Lanka. (Source: Bursa Malaysia)

SapCrest: Wins RM99.5m contract. SapuraCrest Petroleum Berhad's 50%-owned associate company, Labuan Shipyard & Engineering Sdn Bhd (LSE) had been awarded a shipbuilding contract by Tanjung Offshore Berhad to engineer, construct, test and deliver one unit 77m platform supply vessel (PSV) worth RM99.5m. (Source: Bursa Malaysia)

Huat Lai, Lonbisco, TPC: Huat Lai launches GO for TPC after buying 34%. Huat Lai Resources Bhd has signed a sale and purchase agreement with London Biscuit Bhd to acquire 26.9m shares or 33.7% of TPC Plus Bhd for RM8.1m and will launch a general offer for TPC. London Biscuits said the disposal of its shares in its poultry company would enable the group to focus on its core business of cakes, candies, wafers and snack confectionery. (Source: Bursa Malaysia)

Wijaya Baru: To buy Indonesia land for RM255m. Wijaya Baru Global Bhd has entered into two agreements to buy 80,000ha in Indonesia for RM255.2m to replenish its timber extraction business. The agreements were with Suffolk Pte Ltd and Wealthgate Pte Ltd for USD40m cash each in total. Wijaya Baru said its last timber licence expired on July 9, 2010, and the acquisition was done in view of the loss of revenue from the timber division and the intention to maintain its core business of timber extraction. The proposed acquisition will provide an immediate and stable income stream for its core business and, at the same, time allow the group to expand its business regionally (Source: The Star)


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