Highlights

Affin Holdings - The writebacks continue

Date: 20/08/2013

Source  :  CIMB
Stock  :  AFFIN       Price Target  :  3.70      |      Price Call  :  SELL
        Last Price  :  2.13      |      Upside/Downside  :  +1.57 (73.71%)
 


Target RM3.70 (Long Term: Under Perform)

The writebacks in loan loss provisioning (LLP) pushed Affin's 1H13 net profit slightly above our expectations, at 54% of our full-year forecast (51% of consensus). However, we think that the 1H13 net writeback of RM30.7m in LLP will not be sustainable in 2H13.

We up our FY13 net profit by 2.3% as we cut our LLP projection by 30%. However, we maintain our DDM-based target price (12.6% COE; 4% long-term growth). It remains an Underperform due to 1) a slowdown in loan growth; 2) an expected upturn in credit costs; and 3) margin compression. We prefer Maybank. 

A weak topline growth 
The group's 1H13 operating revenue rose only by 2.1%, substantiating our concerns of a weak topline growth. Net interest income expanded by 2.3% as it was impacted by a 9bp yoy contraction in net interest margin. Non-interest income (excluding the Islamic banking income) was flattish at RM192.4m, with a 6-7% yoy increase in fee income and foreign exchange gains. 

Slower loan growth 
In line with the industry trend, Affin's loan growth eased from 9.6% yoy in Mar 13 to 8.7% yoy in Jun 13 (vs. the industry's 9.1%). This was due to slower expansion of loans for the purchase of big-ticket items, but the contraction in working capital loans narrowed from 5.2% yoy in Mar 13 to 1.6% yoy in Jun 13. 

Improving asset quality 
The gross impaired loan ratio improved from 2.22% in Mar 13 to 2.09% in Jun 13, while the loan-loss coverage rose from 70.9% to 73.7% over the same period. 

Weak topline growth 
We advise investors to trim their holdings in Affin as we are still cautious about its earnings prospects, as reflected by the 6.3% drop in our projected FY13 EPS. Earnings risks include weak margins, an upturn in credit costs and a slowdown in loan growth.

Share this
Labels: AFFIN

Related Stocks

Chart Stock Name Last Change Volume 
AFFIN 2.13 0.00 (0.00%) 87,000 

  Be the first to like this.
 


 

207  325  512  714 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 SANICHI 0.09-0.01 
 SANICHI-WD 0.025+0.02 
 THHEAVY 0.195-0.005 
 MBSB 0.69-0.025 
 NICORP 0.09-0.01 
 VIVOCOM 0.27+0.01 
 PDZ 0.095-0.02 
 BORNOIL 0.180.00 
 HUBLINE 0.005-0.005 
 AAX-WA 0.295+0.015 

TOP ARTICLES

1. StockAlliance's Daily Stock Performance 28-Jul-2016 StockAlliance's Daily Stock Performance
2. (Icon) CIMB - Undervalued, But Patience Required Icon8888 Gossips About Stocks
3. [转贴] 靠這一招..他42歲就財富自由?存股教官的 3利投資術 Good Articles to Share
4. Talking the rubbish which they named as expert Talking the rubbish which they named as expert
5. StockAlliance's Daily Stock Performance 27-Jul-2016 StockAlliance's Daily Stock Performance
Partners & Brokers