STOCK FOCUS OF THE DAY
Alliance Bank: Transformation initiatives making progress BUY
We maintain our BUY rating on Alliance Bank Malaysia (ABMB) with an unchanged fair value of RM4.40/share. Our fair value is based on FY19 ROE of 10.3%, leading to a P/BV of 1.2x. We have fined-tuned our FY18/19 estimates higher by 1.7%/1.9% respectively after factoring in higher NIM estimates as well as lowered our loan growth projections. The group reported a net profit of RM123mil in 3QFY18 (-0.2%QoQ) which led to a 9MFY18 earnings of RM380mil (-3.6%YoY).
ABMB is one of the key beneficiaries of an increase in interest rate due to the large composition of floating rate domestic loans. A larger portion of the group's expenses is on IT investments, streamlining of branch network, and restructuring, which is expected to be incurred in FY18. This is anticipated to result in a lesser drag on the group's earnings in FY19. With a substantial portion of the transformation expenses out of the way in FY19, we project an improvement to ABMB's CI ratio to 47.0% from 50.0% in FY18, and an improvement in earnings to 12.9% in FY19 compared to a decline of 2.9% in FY18.
Others :
Cahya Mata Sarawak: Leveraging state’s growth story BUY
Gent Plantations: Strong earnings from Indonesia unit BUY
HLFG: Stronger 2QFY18 with higher earnings from all key divisions BUY
Sunway Construction: A soft patch in precast business in FY17 BUY
Econpile: 1HFY18 net profit grows 16% YoY HOLD
HLBB: Healthy asset quality with stable credit cost HOLD
Kerjaya Prospek: FY17 net profit grows 25% YoY HOLD
Media Chinese: Soft patch expected in 4QFY18 HOLD
WCT Holdings: Earnings fail to bounce back significantly in FY17 HOLD
Padini Holdings: All good things come to an end SELL
QUICK TAKE
CIMB:Pressure on NIM continues for Niaga while credit cost gradually improves HOLD
STOCKS ON RADAR
ViTrox Corporation, Kelington Group, JAKS Resources, PUC
NEWS HIGHLIGHTS
Automobile Sector: Naza moves up a notch in the industry with Groupe PSA deal
AirAsia: LCCT in Sarawak to cost up to RM300mil
JAKS: Gets stay blocking release of bank guarantee to Star Media
Kronologi Asia: Sees another record year
DISCLAIMER:
The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.
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