- We are downgrading Malayan Banking Bhd (Maybank) to HOLD
from BUY, with a revised fair value of RM9.50/share. This is based on an ROE of
14.4% (previously 14.8%) FY12F, which translates into a fair P/BV of 2.0x (from
2.1x).
- We believe Maybank may be reconsidering its dividend reinvestment
plan (DRP) as well as dividend payout ratio next year in totality, when its
Section 108 tax credit is fully utilised. To recap, we estimate that Maybank
has a Section 108 tax credit balance of RM1.9bil. We have estimated that the
Section 108 tax credit will be fully utilised if Maybank were to declare
another RM0.99 in GDPS. This means that the Section 108 tax credit will be
fully utilised by FY13’s interim dividend.
- Maybank has hinted that its dividend payout ratio may be lowered
from the current 75% to 80% range, to its officially stated dividend payout
ratio of 40% to 60%, once the Section 108 tax credit is fully utilised. Dividend payout ratio has ranged between 75%
and 80% since it started implementing the DRP in FY10.
- We are now revising our gross dividend per share (GDPS) for
FY13F, to RM0.50 from RM0.70, assuming a dividend payout ratio of 58%. For
FY14F, we have now revised our GDPS forecasts to RM0.52 from RM0.70, assuming a
dividend payout ratio of 55%. This would be in line with the company’s stated
dividend policy of 40% to 60%. In addition, we have also assumed that the DRP
plan would no longer be implemented from mid-2013. This is because the DRP plan
has a relatively dilutive impact to Maybank’s ROE, with the estimated ROE
having been diluted by around 2ppts since it started the DRP plan in FY10.
- The gross dividend yield for Maybank is now much lower, at
5.7%, instead of 8.0% based on our previous forecasts. Thus, essentially the GDPS yield is expected
to revert back to close to the long term mean of 5.4%.
- We believe Maybank’s share price has been wellsupported
mainly by its DRP plan, which provided discounts of between 6% to 10% in terms
of pricing of DRP new shares (compared to market price then), as well as high
dividend yield based on increased dividend payout ratio since FY10. Thus,
looking ahead into FY13F, and given prospects of GDPS being lowered to RM0.50
FY13F from RM0.64 FY12F, we are therefore downgrading our rating on Maybank to
HOLD from BUY.
Source: AmeSecurities
No comments:
Post a Comment