Affin Daily Insight (LV) - 25 August 2014 - AMMB / UMW / CBEE / ECONOMY - US OUTLOOK

Top Calls

Results Note � AMMB (SELL, downgrade) - A weak start to FY15, but disposal gain boosts profits Although AMMB�s 1QFY03/15 headline net profit was up 16.2% yoy to RM536.9m (due to a disposal gain of RM207.6m), core net profit of RM329.3m was disappointing (-10% yoy) on the back of normalization in credit cost (annualised 30bps from a recovery last year), lower than expected fund-based income (-12% yoy), substantially weaker NIM (-23bps yoy to 2.45%), lower non-interest income (-4.7% yoy, ex-disposal gain) and a 9.7% yoy increase in operating expenses. During the quarter, group loans declined qoq by 1.9%, though on a yoy, was up marginally by 1.5%. As a result, we are cutting our forecasts as follows � 17% in FY15E, 15.2% in FY16E and 21% in FY17E, on account of slower loan growth from 10-10.5% p.a. to 5.5-7% p.a.. Concurrently, we also revise down our NIM from 2.5% to 2.2-2.3%. Downgrade to SELL (from REDUCE), at a lower PT of RM5.90 (at a 1.15x P/BV target).

Other Calls

Company Update � UMW (ADD, maintain) - Gaining traction across business segments

Results Note - Choo Bee (ADD, maintain) - Margins erosion led to lower earnings in 1H14

Economy � US Outlook � Weekly Wrap (18 � 22 August 2014) - Are concerns of rate hikes lower after Yellen�s speech?

Morning News & Market Summary