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| | | | | | | | | | | | | | Share Price: | MYR3.95 | Target Price: | MYR4.65 | Recommendation: | Buy | | |
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| | | Improving prospects | | AMMB's forecasts are maintained with projected earnings growth of 11%/8% for FY19/20 respectively. With the group's operational prospects looking brighter, we believe that AMMB deserves to trade at higher valuations, in our view. Correspondingly, we are raising our TP to MRY4.65 (+45sen) on a higher CY19 PBV of 0.8x from 0.7x previously, supported by a CY19 ROE of 8% and a current dividend yield of 4.5%. BUY maintained. | | |
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| | FYE Mar (MYR m) | FY17A | FY18A | FY19E | FY20E | Operating income | 3,728.9 | 3,985.5 | 4,408.9 | 4,684.5 | Pre-provision profit | 1,568.4 | 1,564.7 | 2,000.7 | 2,207.0 | Core net profit | 1,196.9 | 1,202.1 | 1,328.7 | 1,440.5 | Core EPS (MYR) | 0.40 | 0.40 | 0.44 | 0.48 | Core EPS growth (%) | (11.8) | 0.4 | 10.3 | 8.4 | Net DPS (MYR) | 0.18 | 0.15 | 0.18 | 0.19 | Core P/E (x) | 11.1 | 11.6 | 8.9 | 8.2 | P/BV (x) | 0.8 | 0.8 | 0.7 | 0.7 | Net dividend yield (%) | 4.0 | 3.2 | 4.5 | 4.8 | Book value (MYR) | 5.32 | 5.48 | 5.74 | 6.03 | ROAE (%) | 7.7 | 7.4 | 7.9 | 8.1 | ROAA (%) | 0.9 | 0.9 | 0.9 | 1.0 |
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| | MACRO RESEARCH | | | | | | Brent Crude Oil: Trend Line Violated, Correction Has Begun
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI rose for seven consecutive days thanks to late buying support on selected blue chips. At day's end, the benchmark rose 10.61pts to 1,737.28, led by gains in DIGI, PBBANK and GENM. Broader market was bullish with gainers outpacing losers by 473 to 376. A total of 2.34b shares worth MYR2.14b changed hands. Market could poise to advance today, mirroring gains in overnight Wall Street. | |
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| NEWS | | | Outside Malaysia:
U.S: Fed's Powell says trade barriers threaten wages and growth. Federal Reserve Chairman Jerome Powell said protectionism can hurt economic growth and potentially undermine wages, just as the U.S. ratchets up trade tensions with commercial rivals as well as longstanding allies. Testifying before the Senate Banking Committee, Powell was responding to lawmaker questions about the economic impact of President Donald Trump's tariffs. "In general, countries that have remained open to trade, that haven't erected barriers including tariffs, have grown faster. They've had higher incomes, higher productivity," he said. "Countries that have gone in a more protectionist direction have done worse." (Source: Bloomberg)
U.S: Manufacturing output rises by most in four months. U.S. factory production rebounded in June by the most in four months as the industry regained its footing after a fire-related disruption at an auto parts supplier, Federal Reserve data showed. Factory output rose 0.8% after falling a revised 1% (prev. 0.7% drop). Total industrial production, which also includes mines and utilities, increased 0.6% after a revised 0.5% decrease. Capacity utilization, measuring the amount of a plant that is in use, rose to 78% from 77.7%. (Source: Bloomberg)
U.S: Homebuilder sentiment steady as demand, optimism zigzag. Confidence among U.S. homebuilders held steady in July, matching the lowest level of the year, as solid job gains support demand while elevated material costs pressure developers, according to a report from the National Association of Home Builders/Wells Fargo. Housing Market Index unchanged from prior month at 68. Gauge of six-month sales outlook fell to 73, lowest since Sept., from 75. Current-sales measure for single-family homes unchanged at 74; gauge of prospective buyer traffic rose to 52, highest since Feb., from 50. (Source: Bloomberg)
U.K: Employment rose to a record high in the three months through May after the economy created jobs at a stronger-than-expected pace. The number of people in work rose by 137,000, taking the employment rate to 75.7%, the highest since records began in 1971, the Office for National Statistics said. Unemployment held at a 43-year low of 4.2%. Pay growth eased during the period, with wages excluding bonuses rising by 2.7%, as forecast. (Source: Bloomberg)
Japan, EU: Signed a trade agreement that lowers barriers on the movement of goods and services between the two economies and provides a counterweight to U.S. protectionism. The Economic Partnership Agreement will remove a wide range of duties and regulatory obstacles between the EU and Japan, helping Japanese car exports and making it easier for European farmers to sell their produce in the Asian nation. Japanese Prime Minister Shinzo Abe, European Commission President Jean-Claude Juncker and European Council President Donald Tusk signed the pact, which had been under negotiation since 2013. Europe and Japan are rallying to bolster multilateral agreements as U.S. President Donald Trump shuns such pacts and imposes tariffs on trading partners. (Source: Bloomberg) | |
| | | | | Other News:
Advancecon: Bags second earthworks contract for Setia Alam mixed development.The group has bagged its second earthworks contract worth MYR20.51m for the Eco Ardence mixed development in Setia Alam. The contract, entailing earthworks and ancillary works for the second phase of the project, is for nine months from site possession in July. (Source: The Edge Markets)
Kumpulan Jetson: Kumpulan Jetson, Helios to jointly bid for solar power projects in Sabah. The group is planning to jointly bid for any solar power projects in Sabah with Helios Photovoltaic S/B. Kumpulan Jetson told the stock exchange that the parties have entered into a heads of agreement to jointly co-operate to procure the contract and to jointly execute the proposed projects. Upon successful award of contracts, the parties will form a 50:50 special purpose vehicle to undertake the projects with a view of entering into a definitive agreement. (Source: The Sun Daily)
Kumpulan Perangsang Selangor: Unit buys Penang land to build EMS factory. Its indirect wholly-owned subsidiary CPI (Penang) S/B is buying a 4.5-acre piece of land in Bayan Lepas Industrial Park, Penang for MYR27.7m from Penang Development Corp, on which it intends to build a new electronic manufacturing services (EMS) factory. Construction of the new factory is expected to commence in the 1H19, with target completion in 2020. (Source: The Edge Markets) | |
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