KUALA LUMPUR (Jan 6): RHB Research Institute is maintaining its Underweight stance on the banking sector amid prospects of weaker economic conditions ahead.
As for individual recommendations, the research house pointed out Public Bank remains an outperform with a fair value of RM14 as its top sector pick.
RHB Research said among the three main factors that underpin its bearish sector view were that historically, the sector has not performed well during an economic downturn as banks are often viewed as a proxy to the economy.
“For 2012, we project aggregate sector net profit growth to slow to 4.5%, from 10.6% for 2011 but we do not discount further downside risks to our forecasts,” it said.
RHB Research said from a valuations perspective, it finds Malaysian banks less attractive versus regional peers and historical levels.
“We believe the risk of a global double-dip recession has eased somewhat and consequently, have raised our target prices by up to 16%,” the research house said.
As for individual recommendations, the research house pointed out Public Bank remains an outperform with a fair value of RM14 as its top sector pick.
RHB Research said among the three main factors that underpin its bearish sector view were that historically, the sector has not performed well during an economic downturn as banks are often viewed as a proxy to the economy.
“For 2012, we project aggregate sector net profit growth to slow to 4.5%, from 10.6% for 2011 but we do not discount further downside risks to our forecasts,” it said.
RHB Research said from a valuations perspective, it finds Malaysian banks less attractive versus regional peers and historical levels.
“We believe the risk of a global double-dip recession has eased somewhat and consequently, have raised our target prices by up to 16%,” the research house said.
