The Star Online: Business
The Star Online: Business |
- Maybank Research: Banking sector valuations still attractive
- Affin Research maintains "Add" on Genting Malaysia, TP RM4.25
- KLCI edges up in thin trade, may see selling pressure
| Maybank Research: Banking sector valuations still attractive Posted: 05 Jun 2013 06:58 PM PDT KUALA LUMPUR: Maybank KE Research is maintaining its Overweight recommendation on the Malaysian banking sector with a Buy on AMMB, RHB Capital, BIMB and Hong Leong Financial Group (HLFG). It said on Thursday banking sector valuations were still attractive relative to the market as its basket of companies are trading at a 13% to 16% discount to the FBM KLCI. Maybank Research said this was on a forward price-to-earnings ratio (PER) basis while offering faster earnings growth of 8.4% for 2013 (KLCI: 6.1% on-year), 10.3% for 2014 (KLCI: 7.6%). "Relative to regional peers, valuations are still at a slight premium but this premium has narrowed significantly. "The Bursa Malaysia Financial Index (KLFIN) still lags its peers on a year-to-date basis but the stable growth of the sector with the ETP as an economic catalyst, coupled with still attractive dividend yields, provide sector re-rating impetus," it said. The research house Q1, 2013 was a fairly soft quarter with earnings growth tamed by higher overheads and credit costs. "While core operating income rose at a decent pace of 9% on-year, negative JAWS persisted while credit costs rose, resulting in core net profit rising just 2% on-year," it said. According to Wikipedia, the jaws ratio * is a measure used in finance to demonstrate the extent to which a trading entity's income growth rate exceeds its expenses growth rate, measured as a percentage. Maybank Research said annualised loan growth for the Big Six banks was relatively sedate at 9% due to the drag from corporate loans. Loan momentum should however pick up. With just 11% of RM212bil worth of committed ETP projects actualized as at end-2012 and only 29% of Petronas' budgeted capex of RM300bil from 2011-2015 realised, there was still much work ahead, particularly with the 13th General Election out of the way. "We see stable consumer loan demand and faster corporate lending contributing to domestic loan growth of 10.7% for the year," said Maybank Research. * JAWS ratio = Income Growth Rate - Expense Growth Rate) The JAWS ratio is significant in that a larger positive value demonstrates that a trading entity is effectively generating more income over time than it is generating expenses, thereby potentially increasing its profitability, and profitability growth rate. The ratio may also be a negative percentage, which should be a cause for concern for the owners / management of a trading entity as this will over time result in eroded profitability. - |
| Affin Research maintains "Add" on Genting Malaysia, TP RM4.25 Posted: 05 Jun 2013 07:01 PM PDT KUALA LUMPUR: Affin Research is maintaining is "Add" call to Genting Malaysia Bhd with a target price of RM4.25 following its New York expansion plans. It said on Thursday Genting Malaysia has committed to grow its gaming footprint in mature markets including New York. This was despite that the Big Apple had issued a legislation which include "No Destination Resort will be authorised in New York City, and no Destination Resort will be located downstate until a minimum of five years after the first upstate Destination Resort opens". Affin Research said it expected Genting Malaysia to study the legislation before making any decision before bidding for the project proposals. "At this juncture, information is still sketchy especially on the capital expenditure requirement set by the individual county. "Importantly, it appears that there will be no casino allowable in New York City which would be the real jewel for the NY gaming landscape, we opine," it said. Affin Research noted good infrastructure as well as tax and government support would help Genting Malaysia in its gaming destination resort. |
| KLCI edges up in thin trade, may see selling pressure Posted: 05 Jun 2013 06:28 PM PDT KUALA LUMPUR: Malaysia's blue chips advanced in early Thursday trade despite the weak regional bourses and overnight fall on Wall Street, but analysts expect local equities to come under selling pressure. At 9.12am, the FBM KLCI was up 2.05 points to 1,776.47. Turnover was 127.79 million shares valued at RM80.44mil. There were 109 gainers, 151 losers and 144 counters unchanged. Stock market data showed that foreigners were net sellers on Wednesday at RM253.80mil as selling picked up to RM690.70mil compared with buying at RM436.90mil. However, local funds were seen supporting the market with net buying of RM236.10mil and retail investors net buyers at RM17.70mil. BIMB Securities Research said investors should be aware that foreign institutions have been net sellers in the past 10 trading days, with total net outflow more than RM1.2bil. "We believe the outlook of the local market to remain volatile for the moment and investors are advised to stay cautious. Expect to see immediate resistance at 1,785/1,800 while support at 1,770/60," it said. Petronas Gas rose 34 sen to RM21.84 and Petronas Dagangan 24 sen higher at RM25.74 but in very thin trade. UMW edged up 10 sen to RM14.70 with 100 shares done. Among the banks, Hong Leong Bank rose eight sen to RM14.06 with 100 shares done also while Public Bank foreign shed 10 sen to RM16.86 and HLFG six sen to RM15. Naim was the top loser, down 12 sen to RM4.20. Among the plantations, KL Kepong was down eight sen to RM21.40 and PPB Group six sen to RM13.88 while heavyweight Sime Darby fell three sen to RM9.47. |
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