SECTOR FOCUS OF THE DAY
Banking Sector: Consumer loan growth, CI ratio to improve in 2H18 OVERWEIGHT
We continue to be OVERWEIGHT on the banking sector. We now expect the sector's core earnings to grow by 7.6% in 2018 (previously: 9.2%) after lowering our expectation for banks’ non-interest income. This will be contributed by an increase in revenue and improvement in operating expenses (2017 core earnings growth: 10.6%).
For 2018, we retain our loan growth expectation of 5.0% for the Malaysian banking industry supported by a GDP growth of 5.5% (loan-to-GDP multiplier of close to 1.0x). Domestic demand and improvement in external trade remain the drivers of economic growth.
We are upgrading our call on Maybank to a BUY (FV: RM10.70/share) from HOLD arising from an attractive valuation with the stock now trading at 1.3x to our FY19 BV/share estimate. Our other BUY calls are RHB Bank (FV: RM6.10/share), Public Bank (FV: RM26.20/share), Alliance Bank (FV: RM5.00/share), BIMB Holdings (FV: RM5.40/share) and CIMB (FV: RM6.80/share).
Others:
Telekom Malaysia: Worsening credit outlook boosts consolidation push BUY
FBM KLCI ETF: Three FBM KLCI constituents replaced HOLD
RETAIL RESEARCH
Stocks On Radar: Scientex, Scicom MSC, Chemical Company of Malaysia, Boustead Plantations
FOREIGN EXCHANGE
USD/MYR: MYR remains undervalued
NEWS HIGHLIGHTS
MBSB: Done with clean-up
Telecommunication Sector: Shares of telcos fall on earning outlook worries
Kelington Group: YTD new orders hit RM181m
Grand-Flo: Expects a better year with pickup in IT business
DISCLAIMER:
The information and opinions in this report are 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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