Thursday, September 25, 2014

Affin Hwang Capital Daily Insight (LV) - 25 September 2014 - MAYBANK

Top Calls

Company Update - Maybank (BUY, maintain)

- Positives to offset negatives

We reaffirm our BUY rating on Maybank with an unchanged PT of RM12.00, based on 2.0x P/BV target. Despite a subdued 2H14 and stiff competition, we believe that Maybank's net earnings growth remain healthy at 10-11% 2015-16E. Outlook will remain intact on the back of: i)bBetter-than-expected Consumer Financial Services and international loan growth; ii) counter measures to boost NIM through cash management and digital banking drives and stringent cost management; iii) benign GIL at 1.5% and high LLC of 107.7%, while FY14E credit cost will remain in control at below 30bps. We believe that Maybank will continue to fend off M&A threats based on its strengths. Dividend yield remains attractive at 5.5-5.7% FY14-FY16E, based on a high payout ratio of 70%. Key risks - higher CET1 capital buffer arising from the need to locally-incorporate Maybank Singapore, threats from corporate loan default in Indonesia and haircut from loan exposure to MAS (10% haircut ~ 13bps credit cost).


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