• HLIB Institutional Research has a BUY rating on MAYBANK with target price of RM10.27, or 24.2% upside. MAYBANK remains our top proxy pick for banking sector as it offers resilient growth prospects (FY14-17 core earnings CAGR of 5%) at decent valuations of 11.2x and 10.2x FY16-17 P/E (vs. 10-year average 11.6x). Moreover, dividend yield is attractive at 6.8% for FY16, which is 139% higher than its average peers’ 2.8%. We believe such valuations have provided a sufficient margin of safety and cushion further sharp share price decline, supported by grossly oversold daily indicators.
• Grossly oversold. From YTD high of RM9.45 on 24 Apr, MAYBANK’s share prices tumbled 13.4% to a low of RM8.18 on 18 Aug before closing at RM8.27 yesterday, in tandem with the broader market consolidation amid external and internal headwinds.
• Momentum should pick up once MAYBAK’s s hare price is able to reclaim above the lower uptrend channel near RM8.48 (also 23.8% FR). A decisive breakout above RM8.48 bodes well for the stock to advance higher to more formidable resistances at RM8.66 (38.2% FR) and our long term objective of RM8.87 (200- d SMA). Cut loss at RM7.93 (3 sen below 17 Dec low of RM7.96).

Source: Hong Leong Investment Bank Research - 3 Nov 2015