• HLIB Institutional Research has a BUY rating on MAYBANK with target price of RM11.30, or 34.3% upside. MAYBANK remains our top proxy pick for banking sector as it offers resilient growth prospects (FY14-17 CAGR of 9%) at undemanding valuations of 10.4x and 9.4x FY16-17 P/E (vs. 5-year average 11x) and 1.42x P/BV (11% below its 5-year historical average 1.6x). Moreover, dividend yield is attractive at 6.5-7.7% for FY15-17. We believe such valuations have provided a sufficient margin of safety and cushion further sharp share price decline, supported by grossly oversold daily indicators .
• Getting oversold. From YTD high of RM9.45 on 24 Apr, MAYBANK’s s hare prices tumbled 12.7% to a low of RM8.25 before closing at RM8.41 yesterday, in tandem with the broader market selldown amid external and internal uncertainties. Given its oversold position, MAYBANK is likely to find an interim base near RM8.25, following the hammer candlestick pattern. Lower supports are situated at RM8.09 (14 Jan low) and RM7.96 (17 Dec low) zones.

• A decisive breakout above RM8.70 (50% FR) bodes well for the stock to advance higher to more formidable resistances at RM8.98 (200-d SMA) and our long term objective of RM9.15 (50-d SMA). Cut loss at RM7.93.

Source: Hong Leong Investment Bank Research - 13 Aug 2015