HLBANK – Fundamental Analysis (28 May 2015)

HLBANK Analysis:-

Excel – http://1drv.ms/1LL3hco

Notes – http://tinyurl.com/mg9coed

My View:-

  • Valuation:
    • Absolute P/B Valuation
      • Trailing:
        • FY14 (BPS: 8.249) – Fair value 15.28 (Fair Value Uncertainty: HIGH)
        • R4Q (BPS: 8.835) – Fair value 16.36 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (BPS: 8.568) – Fair value 15.87 (Fair Value Uncertainty: MEDIUM)
        • FY16 (BPS: 9.226) – Fair value 17.09 (Fair Value Uncertainty: MEDIUM)
      • BPS applied to reach the current stock price (13.7): 7.397
  • HLBANK has always been conservative in growing its loans and advances. With its stringent credit policies, the bank’s appetite for mostly high quality borrowers and secured-type lending has caused the bank to lag its peers in terms of loans growth.
    • Perhaps, HLBANK can be more aggressive because its loan-to-deposit ratio is only close to 80%, which is below industry average.
  • FY15Q3:
    • 9MFY15 earnings in line with expectations accounting for 75.0% our estimate.
    • Loan growth picked up pace to 8.8%yoy.
    • NOII picked up momentum in 3QFY15 due to better Treasury Market performance.
    • Profit contribution from associate, BOC and JV remained strong.
    • NIM contraction by 6bp yoy to 2.02%
    • Sound asset quality with 85% of its loans collateralised.
    • Fully diluted Group and Bank Entity CET1 ratio at 8.7% and 7.7% respectively.
  • I think HLBANK has potential to be the next PBBANK. I am keen to buy HLBANK in near future.

Latest Financial – Q3 2015 Financial Report (26 May 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4750293

At the time of writing, I did not own shares of HLBANK.


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