PBBANK (1295)-Main market, Banking

HLIB maintained BUY and GGM-TP of RM4.80, based on 1.61x FY24 P/B with assumptions of 12.4% ROE, 8.8% cost of equity (COE), and 3.0% long term growth (LTG). This exceeds the sector’s P/B of 0.89x but in line with its 5-year mean of 1.58x. The premium is warranted given its ROE output is 3ppt higher vs industry’s average

We continue to like Public Bank for its defensive qualities where the bank has strong asset quality and loan loss coverage towering that of pre-pandemic level (1.5x). Furthermore, multi-year low foreign shareholding (current: c.26% vs Mar-11 low of 24% and Mar-18 high of 40%) may cushion downside risk

Accumulate on weakness amid ongoing profit taking pullback

✅Current price: RM4.30

✅Entry: RM4.15-4.24-4.30

✅Resistance: RM4.42-4.52-4.62

✅Cut loss: RM4.09

✅FY12/24E P/E: 12x

✅FY12/24E DY: 4.7%

✅Risk profile: Low

Source: Hong Leong Investment Bank Research - 5 Mar 2024