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Affin IB Research downgrades AMMB to Sell, cuts target price

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Affin IB Research downgrades AMMB to Sell, cuts target price Empty Affin IB Research downgrades AMMB to Sell, cuts target price

Post by Cals Tue 26 Aug 2014, 09:13

Affin IB Research downgrades AMMB to Sell, cuts target price
Business & Markets 2014
Written by theedgemalaysia.com   
Monday, 25 August 2014 08:54

KUALA LUMPUR (Aug 25): Affin IB Research has downgraded AMMB Holdings Bhd to a Sell (from Reduce) at RM7.20 with a lower target proice pf RM5.90 (from RM7.22) and said that although AMMB’s 1QFY03/15 headline net profit was up 16.2% year-on-year (y-o-y) to RM536.9 million (due to a disposal gain of RM207.6 million), core net profit of RM329.3 million was disappointing (-10% y-o-y) on the back of normalisation in credit cost (annualised 30 basis points from a recovery last year), lower than expected fund-based income (-12% y-o-y), substantially weaker NIM (-23bps y-o-y to 2.45%), lower non-interest income (-4.7% y-o-y, ex-disposal gain) and a 9.7% yoy increase in operating expenses.
In a note Monday, the research house said that during the quarter, group loans declined quarter-on-quarter by 1.9%, though on a y-o-y, was up marginally by 1.5%.
“As a result, we are cutting our forecasts as follows – 17% in FY15E, 15.2% in FY16E and 21% in FY17E, on account of slower loan growth from 10-10.5% per annum (p.a.) to 5.5-7% p.a..
“Concurrently, we also revise down our NIM from 2.5% to 2.2-2.3%.
“Downgrade to Sell (from Reduce), at a lower target price of RM5.90 (at a 1.15x P/BV target),” it said.
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