(AFG MK/HOLD/RM3.87/Target: RM4.10)

Upfront investment costs will cap earnings growth in FY18. That said, above-sector cash dividend yield of 4.1% should provide support to share price while rising interest rates are positive to AFG as the group has the highest proportion (91%) of floating-rate loans in the industry. M&A could serve as a wildcard catalyst with the rumours of a potential merger with Hong Leong Bank. Maintain HOLD with a lower target price of RM4.10 (1.19x FY18F P/B, 10.0% ROE) post earnings revision. Entry price: RM3.65.

Source: UOB Kay Hian Research - 18 Jul 2017