(HLBK MK/BUY/RM13.96/Target: RM15.30)

HLBK’s 3QFY17 earnings came in 5% above our estimate. Strong NIM expansion and the recovery at the Bank of Chengdu contributed positively. The stock is currently trading at an undemanding 1.20x FY18F P/B. The market has yet to appreciate its solid liquidity profile (lowest LDR in the industry) and high regulatory reserve buffers. A sustained growth recovery at Bank of Chengdu should help to catalyse a re-rating. Post earnings revision and rolling forward our valuations to FY18, we upgrade to BUY with a higher TP of RM15.30 (10.1% ROE, 1.36x FY18F P/B).

Source: UOB Kay Hian Research - 30 May 2017