Public Bank (HOLD)

Continued To Deliver

'''' 4QFY11 results were in line with HLIB and consensus.''

'''' 2^nd interim single-tier dividend of 28 sen.'' FY11 total of 48 sen (48.3% payout), in line with HLIB's projection and company's unchanged dividend policy of circa 50%.

'''' FY11 loans growth of 13.5% yoy slightly behind target of 14-15% and our assumption of 14% mainly due to overseas operations (only 7%) while domestic growth was 14.1%.

'''' Targeting 12-13% FY12 loans and deposits growth (vs. HLIB's 11%) to offset anticipated 10-15bps erosion in NIM.''

'''' Asset quality continued to improve and remained stable.'' Guidance is for both asset quality and credit charge to stay stable with boost from full adoption of FRS139.''

'''' No issue meeting Basel III requirements and will strive to maintain a lean capital structure.'' BNM's concept paper on counter-cyclical capital buffer is expected by 2014.

'''' FY12-13 forecasts raised by 1.4-1.9% following final results while we introduced FY14 forecast.

'''' Thus, target price raised to RM13.90 (Gordon Growth with ROE of 24.3% and WACC of 9.6%) vs. RM13.45.

''

MAHB (BUY)''

'''' MAHB has proposed raise RM600m for its revised RM3.6-3.9bn capex (previously RM2bn) of KLIA2,'' through private placement exercise involving new share issuance of up to 10% of issued share capital or 110m shares.

'''' The exercise is expected to be completed within 1H12.

'''' The proposed private placement was within our expectation.

'''' We have estimated earnings dilution impact of 4.6% in 2012 (half year impact) and 9.1% in 2013.

'''' We are positive on the long term prospect of KLIA2 development backed by the continuous expansion of low cost airlines and strong demand for regional budget travelling.

'''' Maintain Buy with unchanged target price of RM6.80.