Sell maintained. RHB Cap's 2011 results were within expectations, with net profit of RM1.5b up 6% YoY. Fundamentals are improving and management's focus will be on driving down operational and funding costs. Earnings risks nevertheless remain, with potential near-term EPS dilution from the acquisition of Bank Mestika, if the deal materialises. Our earnings forecasts are raised by 9-10% p.a. over FY12-14 and our TP is correspondingly lifted to RM7.20 on a higher 2012 P/BV target of 1.3x (1.2x previously), on a prospective 2012 ROE of 14.1%.

Maybank Research 29 Feb 2012

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