PBBANK – Fundamental Analysis (23 Apr 2015)

PBBANK Analysis:-

Excel – http://1drv.ms/1EfzYhf

Notes – http://tinyurl.com/popzxf3

My View:-

  • Valuation:
    • Absolute P/TBV:
      • Trailing:
        • FY14 (BPS: 7.674) – Fair value 22.54 (Fair Value Uncertainty: MEDIUM)
        • R4Q (BPS: 7.275) – Fair value 21.37 (Fair Value Uncertainty: HIGH)
      • Forward:
        • FY15 (BPS: 7.813) – Fair value 22.95 (Fair Value Uncertainty: MEDIUM)
        • FY16 (BPS: 8.549) – Fair value 25.11 (Fair Value Uncertainty: MEDIUM)
      • BPS applied to reach the current stock price (19.62): 6.679
  • In FY14-FY15, intense competition amongst financial institutions for market share as well as the need for higher capital conservation due to the requirements of Basel III capital framework, will continue to put pressure on pricing of products and return on equity. PBBANK growth will be slowing down, and this is proven from the declining ROE in the past 5 years.
  • Post rights issue exercise and after deduction in interim dividend declared, the Group’s CET1 ratio stands at 10.8%. At 10.8% for Group level, this will be sufficient to cover for the requirements of Basel III on Group’s CET1 ratio of 7% (inclusive of 2.5% capital conservation buffer) as well as a potential implementation of a counter cyclical capital buffer of up to 2.5% by 2019 on Financial Holding Companies.
  • With the full year impact of its enlarged capital after the completion of rights issue coming into effect, ROE will be much lower.
  • Lower dividend payouts in the range of 45-46% is expected
  • For latest Banking sector analysis, please visit http://www.midf.com.my/images/pdf/research-Report/Equity-Beat/2015/Banking-Feb%202015%20BNM%20Stats-MIDF-010415.pdf
  • Looks like valuation of PBBANK is still attractive.

Latest Financial – Q1 2015 Financial Report (20 Apr 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4709641

At the time of writing, I owned shares of PBBANK.


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