Excel – http://1drv.ms/1GiyDb7
Notes – http://tinyurl.com/kkqt2c9
- Absolute EY%:
- FY14 (EPS: 0.742) – Fair value 9.94 (Fair Value Uncertainty: HIGH)
- R4Q (EPS: 0.724) – Fair value 9.71 (Fair Value Uncertainty: HIGH)
- FY15 (EPS: 0.731) – Fair value 9.8 (Fair Value Uncertainty: HIGH)
- FY16 (EPS: 0.778) – Fair value 10.43 (Fair Value Uncertainty: HIGH)
- EPS applied to reach the current stock price (9.35): 0.697
- Dividend Discount Model
- Base Scenario: 9.21 (Fair Value Uncertainty: HIGH)
- Good Scenario: 9.03 (Fair Value Uncertainty: HIGH)
- Bad Scenario: 8.85 (Fair Value Uncertainty: HIGH)
- Ugly Scenario: 8.69 (Fair Value Uncertainty: HIGH)
- Residual Income Model (This model is very defensive. I consider the derived price as the bare minimum price)
- Base Scenario: 9.03
- Good Scenario: 7.33
- Bad Scenario: 5.78
- Ugly Scenario: 4.36
- Absolute EY%:
- In my opinion, MAYBANK is currently fully valued. Compare to my previous valuation, the fair values are reduced due to declining of ROE and stagnant dividend payout growth.
- Despite Net profit is unexpectedly strong (+20.1%qoq; +11.5%yoy), MAYBANK’s ROE declined from 14.2% (FY13) to 12.7% (FY14).
- Please note that my ROE calculation is slightly different from other analysts, but disregard formula variant, MAYBANK ROE has been declining in these few years.
- I think this is a common issue in Malaysia banking
- For latest Banking analysis, please refer: http://tinyurl.com/lv5yp9q
- For FY15, management has guided an ROE of 13-14%, Group loan growth of 9-10% (Malaysia: 8-9%, Singapore: 8-9% and Indonesia: 13-15%), Group deposit growth of 9-10%, CI ratio of 47-48%, NIM contraction of 8-10bp and credit cost of not more than 0.30%.
- Due to its strong dividend yield, healthy liquidity and strong capital position, I will continue to hold MAYBANK, and accumulate MAYBANK without increasing my average price too much.
Latest Financial – Q4 2014 Financial Report (26 Feb 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1885573
At the time of writing, I owned shares of MAYBANK.