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Affin’s acquisition of HwangDBS biz will lift FY15-16 earnings up 10%, says Alliance

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Affin’s acquisition of HwangDBS biz will lift FY15-16 earnings up 10%, says Alliance Empty Affin’s acquisition of HwangDBS biz will lift FY15-16 earnings up 10%, says Alliance

Post by Cals Wed 21 May 2014, 01:41

Affin’s acquisition of HwangDBS biz will lift FY15-16 earnings up 10%, says Alliance
Business & Markets 2014
Written by Jeffrey Tan of theedgemalaysia.com   
Tuesday, 20 May 2014 13:47

KUALA LUMPUR (May 20): Affin Holdings Bhd’s acquisition of HwangDBS businesses, which was completed on Apr 7, 2014, will lift earnings approximately 10% for FY15F and FY16F, according to Alliance Research.

However, the research house said it expects the inclusion of HwangDBS businesses to be earnings neutral in FY14F.

In a note today, Alliance Research said Affin’s 1Q net profit was 22% of its FY14F estimates, despite net interest margin had fallen 7 basis points quarter-on-quarter (q-o-q) due to competition. It added this led to lower net interest income in the quarter.

“We maintain a hold call for the stock at RM3.82 with an unchanged target price (TP) of RM4.05,” said Alliance, noting the TP accounted for dilution for rights issue.

“In our view, the current valuation has priced in the impact of the merger of HwangDBS businesses and the dilution impact of the rights issue.”

According to Alliance, the banking group’s expenses fell q-o-q mainly due to lower professional fees incurred in 1Q.

Loan recoveries continued to lift operating profit, while asset quality remained intact with gross non-performing loans ratio improving to 1.92% from 1.98% in fourth quarter last year, it added.
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