Period 2Q12/1H12
Actual vs. Expectations
The 1HFY12 PAT of
RM123.1m was within the consensus’ forecast (51%) and that of ours (49%).
Dividends Declared a gross interim single tier dividend
of 3.5%.
Key Result Highlights
YoY, the fund based
incomes grew 8.4% thanks to a strong financing growth of 27% to reach a total financing
portfolio of RM16.8b. The balance sheet continued to expand at a fast pace as
the financingto-deposit ratio rose to 57.2%, up from 50.1% in 4Q11.
However, QoQ, the
2Q12 fund-based incomes grew only marginally by 0.6% to RM249m as the financing
margin was squeezed by 77bps although there was a very strong 10.0% financing
growth in 2Q12.
We note that non-fund
based incomes were also strong in 2Q12. The non-fund based incomes of RM208.1m
(+2.8% QoQ and +35.0% YoY) made up 46% of the total income in 2Q.
We see improving
asset qualities with the gross impaired financing falling o RM331.2m and the
gross impaired ratio improving to 1.97% (from 2.29% in 1Q12). The RM1.9m
allowances were 94% lower QoQ. The financing loss coverage meanwhile hit a high
at 126.0%.
The cost-to-income
ratio was also higher at 62.1% vs. 56.1% in 1Q12. In
summary, 1H12 ROE of 13.5% was in line with our estimate.
Outlook As we
have argued in our initiation note earlier, BIMB is expected to deliver a
faster balance sheet growth and achieve a better asset quality similar to its
peers in 2-3 years time, benefiting from BNM’s new ruling under its Responsible
Finance Policy. A progressive reduction in credit costs may also boost its
profitability.
Going forward,
management is still guiding for a higher financing growth from the financing of
ETPrelated projects.
Change to Forecasts
We are maintaining
our FY12-13E PAT of RM248.8m-267.5m.
Rating MAINTAIN OUTPERFORM
We believe any
potential corporate actions mentioned above could act as a rerating catalyst
for the group. On the operating side, we believe its 12% ROE target is highly
achievable despite the current gloomy environment.
Valuation We
are keeping our target price of RM3.60 unchanged based on 1.7x FY13 BV of
RM2.10.
Risks Tighter lending rules and a margin squeeze.
Source: Kenanga
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