Period 1Q12
Actual vs. Expectations
1QFY12 PAT of RM64.9m was marginally above the consensus’
forecast (29%) but was within ours (25%).
Dividends No dividend was proposed.
Key Result Highlights
YoY, fund based incomes grew 16% thanks to a strong
financing growth of 19% to reach a total
financing portfolio of RM15.3b. Its balance sheet continued to expand at a fast
pace as the financingto-deposit ratio rose to 57.3%, up from 50.1% in 4Q11.
However, QoQ, the 1Q12 fund-based incomes contracted 4.4% to
RM247m as financing margin was squeezed by 17bps although there was a healthy
5.0% financing growth in 4Q12.
We note that non-fund based incomes were strong in 1Q12. The
non-fund based incomes of RM202.4m (+6.0% QoQ and +33.0% YoY) contributed 45%
of the total income in 1Q.
We see improving asset qualities with the gross impaired
financing falling to RM351m with the gross impaired ratio improving to 2.29%
(from 2.61% in FY11). The RM30.6m
allowances were 40% lower QoQ. Financing
loss coverage meanwhile hit a high at 117.8%.
Cost-to-income ratio was also higher at 56.1% vs. 51.2% in
4Q11 and 57.0% in 1Q11.
In summary, the achieved 14.2% ROE was in line with our
estimate.
Outlook As we argued in our initiation note, BIMB
will deliver a faster balance sheet growth and achieve asset quality, which is
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
boost its profitability. Going forward, we maintain our conservative financing growth
expectation of 10% and profit rate of 2.96%. Non-fund based incomes
contribution is expected to account for 35% for the total income.
Change to Forecasts
We are maintaining our FY12-13E PAT of RM248.8m-267.5m.
Rating MAINTAIN OUTPERFORM
Trading at 9.35x forward PER and 0.96x FY13E P/BV, BIMB is
currently trading at around a 47% discount to the average P/BV of the industry
but yet delivering reasonable ROE and earnings growth for 2011-13E.
Valuation We are keeping our target price of RM2.90 unchanged
based on 1.2x FY13 BV of RM2.49.
Risks Tighter lending rules and a margin squeeze.
Source: Kenanga
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