SECTOR FOCUS OF THE DAY
Banking: Surge in applications and approvals of household loans OVERWEIGHT
Industry loan growth gained ground to 5.0% YoY in June 2018 from 4.9% YoY in May 2018 with an improvement in both household and non-household loans. On a year-to-date (YTD) basis, industry loan growth surged to 5.2% annualised vs. our expectation of a 5.0% growth for 2018.
Loan applications and approvals picked up in June 2018, particularly loans for purchase of passenger cars. June 2018 saw the growth in industry loan applications climbing to 13.3% YoY from -9.2% YoY in May 2018. Both household and non-household loan applications were higher in June 2018. Growth in applications and approvals for loans to purchase of passenger cars, personal loans and credit cards improved in line with the expected increase in consumer spending taking advantage of the tax holiday (3-month period between the implementation of zero-rated GST on June 1 and the reintroduction of the sales and services tax [SST] on Sept 1).
Valuation remains attractive for banks and we maintain OVERWEIGHT on the sector. Our 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), CIMB (FV: RM6.80/share) and Maybank (FV: RM10.70/share).
Others:
UEM Sunrise: Good earnings visibility for master developer HOLD
RETAIL RESEARCH
Stocks On Radar: Power Root, Dialog Group, Lotte Chemical Titan, Excel Force MSC
ECONOMIC HIGHLIGHT
Japan: BOJ seen to be giving itself more flexibility
NEWS HIGHLIGHTS
Oil & Gas Sector: EPIC unit bags RM500m maintenance contract
Handal: New MD eyes turnaround in two years
Lotte Chemical Titan: Q2 net earnings nearly triple
Opcom: Bags RM11.16mil Unifi contract
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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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