SECTOR FOCUS OF THE DAY
Banking Sector : Rebound in business loans OVERWEIGHT
Loan growth for the industry picked up pace to 5.7%YoY, an improvement of 20bps from the preceding month due to a rebound in business loans while growth in household loans moderated slightly. Industry loan growth improved to 5.7%YoY in June 2017 from 5.5%YoY in May 2017. This was contributed by a stronger pace of non-household loans while household loan growth slipped marginally from the previous month.
By loan purpose, there has been a stronger momentum in working capital loans while household loan growth remained slow, particularly credit for purchase of passenger cars and property. Growth in loans for purchase of residential property improved slightly to 8.9%YoY in June 2017 while loans for purchase of non-residential property continued slide, declining to 3.8%YoY. This reflected banks’ cautious stance in lending for purchase of commercial properties. Maintain OVERWEIGHT with BUYs on RHB Bank (FV: RM6.00/share) and Public Bank (FV: RM22.20/share). We downgrade our call for Hong Leong Bank to HOLD from BUY with an unchanged fair value of RM15.20/share due to its recent strong share price performance. We see Hong Leong Bank as fairly valued at FY18 P/BV of 1.3x on the back of an ROE of 10.3%.
Axiata Group : XL revenue growth gains traction BUY
Malaysia Airports : Strong overall performance HOLD
CIMB Group : Improvement in Niaga’s interest income and credit cost HOLD
STOCKS ON RADAR
Sig Gases, Rohas Technic, YSP Southeast Asia Hldg, Yoong Onn Corp.
Malaysia : PPI suggests business cost has eased
Lotte Chemical Titan Holding : Lotte Chemical Titan takes nosedive
Mudajaya Group : Mudajaya Group bags two Rapid jobs worth RM151m
Public Bank : Public Bank’s Teh to step down as chairman
WMG Holdings : WMG to expand landbank after successful listing
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