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Affin IB Research upgrades AFG to Buy, raises target price

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Affin IB Research upgrades AFG to Buy, raises target price Empty Affin IB Research upgrades AFG to Buy, raises target price

Post by Cals Fri 14 Feb 2014, 10:18

Affin IB Research upgrades AFG to Buy, raises target price
Business & Markets 2014
Written by theedgemalaysia.com   
Friday, 14 February 2014 09:07

KUALA LUMPUR (Feb 14): Affin IB Research has upgraded Alliance Financial Group Bhd (AFG) to a Buy (from Reduce) at RM4.69 with a higher target price of RM5.40 (from RM4.78) and said AFG’s 9MFY03/14 core net profit of RM400 million (after adjusting for rationalization cost of RM22.3 million and one-off fee income of RM30 million) was in-line with Affin IB's FY14 forecast of RM547.5 million, but below consensus.
In a note Friday, the research house said AFG’s 3QFY03/14 net profit continued to expand at 4.0% quarter-on-quarter, driven largely by net-interest income and non-interest income growth.
It said the total FY03/14 dividend per share of 19 sen (versus 16.6 sen in FY03/13), was in-line with AFG’s dividend policy of at least 50%.
“We continue to see good traction in loans growth at 11-13%, outperforming the industry given AFG’s niche in the consumer and SME markets.
“Downside risk to earnings is largely its declining NIMs, of which is inevitable.
“As we roll forward our valuation horizon to CY15’s ROE of 14.1% (growth rate of 5% and cost of equity of 10% unchanged), we derive a target P/BV multiple of 1.78x. This lifts our price target from RM4.78 to RM5.40. Upgrade to Buy from Reduce,” it said.
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