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Share
Price:
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MYR4.02
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Target
Price:
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MYR4.00
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Recommendation:
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Hold
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Should BIMB
restructure?
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We would be positive if BIMB restructured, for there would
be several merits to this, including the prospect of higher dividends.
Such an exercise would nevertheless be neutral on valuations and it is
possible that Bank Islam, on a standalone basis, may not re-rate as
quickly without STMB to provide earnings growth support. While a
restructuring in the future cannot be ruled out, it is unlikely to
happen anytime soon, in our view. HOLD maintained with an unchanged
SOP-TP of MYR4.00.
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Operating income
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2,122.5
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2,289.7
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2,403.7
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2,474.7
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Pre-provision profit
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871.7
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908.3
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938.0
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957.4
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Core net profit
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532.3
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547.3
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535.2
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552.6
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Core EPS (MYR)
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0.36
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0.35
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0.35
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0.36
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Core EPS growth (%)
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37.9
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(0.4)
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(2.1)
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3.2
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Net DPS (MYR)
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0.15
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0.12
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0.12
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0.13
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Core P/E (x)
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11.3
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11.3
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11.6
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11.2
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P/BV (x)
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2.0
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1.8
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1.6
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1.5
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Net dividend yield (%)
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3.7
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3.0
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3.0
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3.1
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Book value (MYR)
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1.97
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2.21
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2.44
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2.67
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ROAE (%)
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18.5
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17.2
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14.9
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14.0
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ROAA (%)
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1.0
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1.0
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0.9
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0.9
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MACRO RESEARCH
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Economics Research
by
Suhaimi Ilias
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Headline inflation rate dropped further in May 2016 to
-1.6% YoY (Apr 2016: -0.5% YoY) while core inflation edged up +1.0%
YoY (Apr 2016: +0.8% YoY). The drop was mainly attributed to lower
cost in “Housing & Utilities” as well as “Transport”, cancelling
the positive contribution by “Food” prices. No change to our 2016
headline inflation rate forecast at -0.4% and expect core inflation
rate at +0.5%.
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Suhaimi Ilias
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Zamros
Dzulkafli
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Technical Research
by Lee
Cheng Hooi
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The FBMKLCI rose by 2.29 points to close at 1,639.98
yesterday, while the FBMEMAS and the FBM100 gained 11.65 points and
11.13 points respectively. In terms of market breadth, the
gainer-to-loser ratio was 305-to-406, while 383 counters were
unchanged. A total of 1.11b shares were traded valued at MYR1.44b.
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NEWS
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Outside Malaysia:
U.S: Purchases of new homes declined in May from an
eight-year high as the housing market continued to display the choppy
progress that’s been a hallmark of the recovery. Sales fell 6% to a
551,000 annualized pace following a 586,000 rate in April that was slower
than previously estimated, Commerce Department figures showed. While the
report showed demand retrenched last month, the volatile data are showing
gradual improvement on the back of steady job gains and low mortgage
rates. (Source: Bloomberg)
U.S: Fewer Americans than forecast filed for unemployment
benefits last week, adding to evidence that the labor market is healthy
and stable. Jobless claims dropped by 18,000 to 259,000 in the period
ended June 18, a Labor Department report showed. It was the biggest
decrease since the first week of February. Hiring managers are finding
little reason to pare staff amid a dwindling pool of available workers.
Sustained low levels of jobless claims have helped to reassure Federal
Reserve policy makers that the recent slowdown in payroll gains will
dissipate. Claims in the prior week were unrevised at 277,000. Filings
have been below 300,000 for 68 straight weeks -- the longest stretch
since 1973 and a level economists say is typically consistent with a
healthy labor market. (Source: Bloomberg)
Germany: Economy is showing little sign that Britain’s
referendum on European Union membership is damping investment, according
to Markit Economics. A Purchasing Managers’ Index for manufacturing and
services was at 54.1 in June after a reading of 54.5 in May. While that’s
the lowest in two months, it’s well above the 50 mark that divides
expansion from contraction. (Source: Bloomberg)
Philippines: The central bank left its benchmark interest
rate unchanged in its first meeting since revamping its policy framework,
providing stability to investors in the face of possible market fallout
if the U.K. votes to exit the European Union. Bangko Sentral ng Pilipinas
kept the overnight borrowing rate at 3%. The bank lowered the rate last
month and narrowed the band around it to make monetary policy more
effective. Policy makers are saving their firepower as incoming President
Rodrigo Duterte lays out plans to boost economic growth when he takes
office on June 30. (Source: Bloomberg)
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Other News:
Consumer: Ekuinas-backed PE fund to buy stake in MBG. CMS
Opus Private Equity Sdn Bhd, a private equity fund which undertakes
investments on behalf of government-owned private equity firm Ekuiti
Nasional (Ekuinas), is said to acquire MBG Fruits Sdn Bhd, a fresh
produce chain store operator.The signing caremony is expected to be held
later in the evening. (Source: The Edge Financial Daily)
IPO: Dancomech Holdings to float its shares on the Main
Market. The company plans to raise MYR18m when it floats its shares on
Bursa Malaysia. The funds raised will be used to buy of-fices-cum-stores,
and for the repayment of bank borrowings. Out of the new IPO shares, 7.5m
are available to public subscription, 2.5m for eligible directors,
employees and persons who have contributed to the success of the group
and 13.99m for bumiputera investors. The application for the shares will
be close on July 12. (Source: The Edge Financial Daily)
Gabungan AQRS: Secures PR1MA homes deal. The property
developer company will build 1,140 PR1MA homes for PR1MA Corp Malaysia in
a deal worth MYR314m on the developer’s 19.03 acre site in Dengkil,
Selangor. Under the agreement, the government body will purchase 1140
units of the company’s PR1MA homes, along with the respective
infrastructure, facilities and amenities from Gabuangan Strategik Sdn Bhd
(a wholly owned unit of Gabungan AQRS) and AQRS The Building Company Sdn
Bhd, being the land owner of the project. The project, which comprises
four blocks of 19-storey apartments will start construction 1QFY17.
(Source: The Sun Daily)
Benalec Holdings: Gets green light to reclaim more land at
Tanjung Piai. The company has been given the go-ahead to reclaim another
2,407 acres, allowing for the construction of all three phases of the
Tanjung Piai Integrated Petroleum & Petrochemical hub and Maritime
Industrial Park (TPMIP), oil storage terminals and related marine
facilities. To date Benalec has seen the formation of land covering more
than 100 acres under the first phase of TPMIP. (Source: The Edge Financial
Daily)
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