Friday, April 21, 2017

Group’s loans (domestic and overseas) grew modestly by 7.0% YoY in 1QFY17. Even though domestic loans growth decelerated to 6.1% YoY compared to 7.2% YoY in the preceding quarter, it continued to stay ahead of the domestic industry's growth rate. 1QFY

STOCK FOCUS OF THE DAY
Public Bank  : Strong NIM expansion in 1QFY17                                                   BUY

We are upgrading our call on Public Bank Bhd (PBB) from HOLD to BUY with a higher fair value of RM22.30/share (previously RM20.30/share). The revision in call and fair value was due to the roll over of our valuation to FY18. We continue to peg the stock to an unchanged P/BV ratio of 2.1x, lower than its 5-year historical average P/BV of 2.7x. For FY18, we expect the group to achieve a ROE of 14.3% which is still higher than the sector average ROE of 10.0-11.0%. PBB reported a marginally higher core net profit of RM1.25bil (+1.5% YoY) in 1QFY17. The rise in earnings was mainly driven by higher net interest income (NII) and Islamic banking income, partially offset by higher overhead expenses (opexOPEX) and lower non- interest income from a drop in investment income and FX profit. Earnings in 1QFY17 were within expectation, making up 23.2% and 23.8% of ours and consensus estimates respectively for FY17 net profit.

Group’s loans (domestic and overseas) grew modestly by 7.0% YoY in 1QFY17. Even though domestic loans growth decelerated to 6.1% YoY compared to 7.2% YoY in the preceding quarter, it continued to stay ahead of the domestic industry's growth rate. 1QFY17 saw a significant improvement in CASA with a growth of 12.3% YoY. NIM continued to rise and improved further in 1QFY17 by 9bps QoQ to 2.31%. We believe that this has been contributed by management of funding cost which saw a lower interest expense from customer deposits on a QoQ basis. Overall GIL ratio remained healthy at 0.5% with a marginally higher loan loss cover of 103.9%. Stable capital ratio with group CET1 ratio at 11.4%. interim dividend has been proposed in 1QFY17. We maintain our forecast for now.

Others :
Sasbadi Holdings : Going beyond the classroom                                                 BUY
Property Sector  : SEAL-ing the deal for S P Setia                                                NEUTRAL
British American Tobacco : Bleak outlook ahead                                                 SELL

QUICK TAKE
CIMB Group : CIMB Thai returns to the black       BUY

STOCKS ON RADAR
IQ Group,Yee Lee Corporation,Aemulus Holdings,Green Packet

ECONOMIC HIGHLIGHT
Japan : Economy gaining traction
Indonesia : Accommodative monetary policy, with room for tightening

NEWS HIGHLIGHTS
Healthcare Sector : KPJ Healthcare eyes 10% growth in revenue, net profit for FY17
Tobacco Sector : Sharp drop in cigarette sales hits BAT’s bottom line
Logistics Sector : MISC eyes up to four FPSO contracts

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