KUALA LUMPUR (Nov 15): MIDF Research raised its target price for MALAYAN BANKING BHD [] to RM8.80 from RM8.50 previously and said it had lowered its assumption for credit cost for FY11 and FY12 from 30 basis points (bps) to 15 bps and 25 bps respectively.
In a note Tuesday, Nov 15, the research house it had in addition raised its loan growth assumption for FP11 to an annualised rate of 12% from 10% previously.
“However, we are maintaining our loan growth forecast of 10% for FY12 as we continue to expect loan growth to moderate subsequently based on the lower annualised growth rate for domestic loans as well as expected moderation in loan growth for international operations eventually with the economic slowdown of Singapore and Indonesia.
“The adjustment lifts our EPS forecast from 30 sen to 32 sen for FP11 and from 62 sen to 63 sen for FY12. Hence, our ROE is adjusted higher to 14.8% (annualised) for FP11 and 14.3% for FY12 from 14.0% and 14.2% previously,” it said.
MIDF Research said the revised target price of RM8.80 was based on a FY12 1.92x PBVR (1 standard deviation below the 5-year average PBVR of 2.2x) and FY12 14.0x PER.
“However, with the expected total return of less than 15.0%, we are downgrading our call for the stock from Buy to Neutral,” it said.
In a note Tuesday, Nov 15, the research house it had in addition raised its loan growth assumption for FP11 to an annualised rate of 12% from 10% previously.
“However, we are maintaining our loan growth forecast of 10% for FY12 as we continue to expect loan growth to moderate subsequently based on the lower annualised growth rate for domestic loans as well as expected moderation in loan growth for international operations eventually with the economic slowdown of Singapore and Indonesia.
“The adjustment lifts our EPS forecast from 30 sen to 32 sen for FP11 and from 62 sen to 63 sen for FY12. Hence, our ROE is adjusted higher to 14.8% (annualised) for FP11 and 14.3% for FY12 from 14.0% and 14.2% previously,” it said.
MIDF Research said the revised target price of RM8.80 was based on a FY12 1.92x PBVR (1 standard deviation below the 5-year average PBVR of 2.2x) and FY12 14.0x PER.
“However, with the expected total return of less than 15.0%, we are downgrading our call for the stock from Buy to Neutral,” it said.
