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Share
Price:
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MYR6.10
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Target
Price:
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MYR6.30
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Recommendation:
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Hold
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Internal
restructuring complete
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With RHB Capital’s (RHB) internal restructuring completed,
what shareholders can look forward to next is a 1.3 RHB Bank shares for
every 1 RHB share swap, as a precursor to the listing of RHB Bank. The
ratio is higher than our initial estimate of 1.25x and on the back of a
higher proforma book value as well, our TP is raised to MYR6.30 from
MYR5.85, pegging RHB Bank’s proforma 2016 BV to an unchanged 0.9x
(estd. ROE 9%) while accounting for the share swap ratio as well. HOLD
maintained.
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Operating income
|
6,234.9
|
6,191.2
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6,303.2
|
6,572.7
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Pre-provision profit
|
2,823.7
|
2,398.0
|
2,863.4
|
2,991.6
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Core net profit
|
1,925.6
|
1,689.2
|
1,775.7
|
1,831.1
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Core EPS (MYR)
|
0.71
|
0.65
|
0.57
|
0.59
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Core EPS growth (%)
|
3.2
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(9.2)
|
(11.5)
|
2.6
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Net DPS (MYR)
|
0.06
|
0.12
|
0.14
|
0.15
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Core P/E (x)
|
8.5
|
9.4
|
10.6
|
10.3
|
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P/BV (x)
|
0.8
|
0.8
|
1.1
|
1.0
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Net dividend yield (%)
|
1.0
|
2.0
|
2.3
|
2.5
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Book value (MYR)
|
7.31
|
7.51
|
5.40
|
5.89
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ROAE (%)
|
10.8
|
8.1
|
8.9
|
10.5
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ROAA (%)
|
0.9
|
0.8
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0.8
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0.8
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Share
Price:
|
MYR1.47
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Target
Price:
|
MYR1.45
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Recommendation:
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Hold
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1Q16 in line
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1Q16 earnings were within our and consensus’ expectations.
YoY earnings growth was largely supported by additional contributions
from its new assets and improved profits from Gurney Plaza and East
Coast Mall. However, we remain cautious on Sungai Wang Plaza which
could limit near-term earnings. Maintain HOLD with unchanged earnings
forecasts and DCF-based TP of MYR1.45 (WACC: 7.2%, terminal yield:
6.5%).
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Revenue
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315.4
|
344.8
|
365.5
|
380.5
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Net property income
|
208.9
|
226.4
|
250.9
|
260.4
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Distributable income
|
158.4
|
162.8
|
177.4
|
185.1
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DPU (sen)
|
8.0
|
7.7
|
7.9
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8.1
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DPU growth (%)
|
0.7
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(3.5)
|
1.5
|
3.6
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Price/DPU(x)
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18.3
|
19.0
|
18.7
|
18.1
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P/BV (x)
|
1.1
|
1.1
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1.1
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1.1
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DPU yield (%)
|
5.5
|
5.3
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5.3
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5.5
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ROAE (%)
|
6.7
|
6.3
|
6.2
|
6.5
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ROAA (%)
|
4.5
|
4.1
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4.0
|
4.1
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Debt/Assets (x)
|
0.3
|
0.3
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0.3
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0.3
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MACRO RESEARCH
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Technical Research
by Lee
Cheng Hooi
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Failed to
sustain above 1,726
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The FBMKLCI rose 0.67 points to close at 1,723.78
yesterday, while the FBMEMAS and FBM100 gained 4.64 and 5.40 points
respectively. In terms of market breadth, the gainer-to-loser ratio
was 366-to-437, while 405 counters were unchanged. A total of 1.63b shares
were traded valued at MYR1.95b.
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NEWS
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Outside Malaysia:
U.S: Jobless claims decline to match lowest since 1973,
indicating employers are upbeat about an economy that bogged down in the
first quarter. Jobless claims dropped by 13,000 to 253,000 in the week
ended April 9, equaling the level in March that was the lowest since
November 1973, a report from the Labor Department showed. Continuing
claims also declined, to the lowest since mid-October. (Source:
Bloomberg)
U.S: Core consumer prices cool in sign pickup transitory.
The cost of living in the U.S. excluding food and fuel rose less than
forecast in March, bearing out Federal Reserve Chair Janet Yellen’s
forecast that the recent pickup would prove fleeting. The core
consumer-price index increased 0.1%, the smallest gain since August,
after consecutive 0.3% gains the prior two months. Including the volatile
food and fuel categories, the index also rose 0.1%. (Source: Bloomberg)
E.U: Euro-Area consumer prices stagnate in March after
revision. A renewed decline in euro-area consumer prices has proved
short-lived after data for March was revised to show stagnation. The
inflation rate in the 19-nation bloc was unchanged, the European Union’s
statistics office in Luxembourg said, revising an earlier reading of
minus 0.1%. Prices fell an annual 0.2% in February, which was the first
drop in five months. (Source: Bloomberg)
U.K: Brexit fallout weighed by Bank of England as rate
left at 0.5%. Bank of England officials said the U.K.’s European Union
referendum may already be weighing on growth as officials assessed the potential
fallout if the nation votes to leave the bloc. In a ramping up of the
language previously used, Governor Mark Carney and his fellow officials
signaled they won’t rush into action as they consider the implications of
a so-called Brexit for policy. They warned it could increase uncertainty,
weigh on demand and on the pound and even have far-reaching consequences
for the labor market and the development of the economy. (Source:
Bloomberg)
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Other news:
Automotive: Perodua captures 36.3% share of TIV in first
quarter. It registered 47,200 units in sales in the first quarter of the
year. Perodua said the stellar performance was led by its latest
best-selling model, the Axia. However, Perodua’s quarter-on-quarter sales
declined 17.4% compared with the 57,200 units registered in Q1 2015.
Perodua said the decrease in TIV was as due to the slower pace of the
economy, the increase in vehicle prices by some of the players due to a
softer ringgit and the lingering effects of the GST. (Source: The Sun
Daily)
PetChem: Drops Rapid’s elastomers project. It has
cancelled an elastomers job at the Refinery and Petrochemicals Integrated
Development (Rapid) project in Pengerang, Johor. The initial total
project investment cost for the polymers, glycols and elastomers segment
was about USD3.9b (MYR15.2b), with a combined capacity of 3.5 million
tonnes per annum (mtpa). The cancellation of the elastomers project will
result in capacity reduction of 0.35 mpta and projected investment cost
by USD1.3b. (Source: The Edge Financial Daily)
SP Setia: Buys 4th piece of land in Melbourne. It intends
to develop into a high-end residential project with a gross development
value of AUD38m (MYR114m). The land is located on a highly sought-after
site in Prahran and the group has a permit approved for an eight-storey
building with 47 apartments, and an office and retail outlets on the
ground floor. (Source: The Edge Financial Daily)
MSM: CEO Sheik Awab passes away. MSM told Bursa Malaysia that
the board will identify a replacement for the position of the president
and group CEO through the proper process. As a recap, Sheikh Awab was
appointed CEO on Jan 1, 2014, having been CEO designate since Dec 1,
2013. (Source: The Edge Financial Daily)
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