Journey to Wealth
Alliance Financial - Second consecutive quarter of loan loss write-back Hold
- We are maintaining our HOLD rating on Alliance Financial Group Bhd (AFG), with an unchanged fair value of RM4.40/share. This is based on FY13F's ROE of 13.2% and consequently, a fair P/BV of 1.7x.
- AFG's annualised 2Q earnings was 8.1% above our forecast and 6.1% above consensus' RM518mil FY13F.
The 1H net earnings made up 52.3% of our forecast and 51.3% of consensus estimate for FY13F. The better-thanexpected earnings stemmed largely from a write-back in loan loss provisions, aided by strong recoveries.
- Annualised gross loans growth remained healthy at 13.1% in 2QFY13. This is in line with company's targeted 14% to 15%, but above our forecast of 5.7% for FY13F.
We estimate NIM improvement of 14bps QoQ.
- Non-interest income was boosted by a forex gain in this quarter, which helped to offset a more normalised gain in its securities portfolio.
- Fee income ratio was sustained at 25.7% in 2QFY13 (1QFY13: 25.8%), with the company on track to meet its long-term target of 30%.
- Gross impaired loans improved with a 1.9% QoQ reduction in 2QFY13 (1QFY13: -2.9% QoQ). Gross impaired loans ratio was slightly better at 2.3% compared with 2.4% in 1QFY13.
- Loan loss cover was relatively unchanged at 86.4% vs. 86.6% in 1QFY13. As mentioned, there was a positive write-back in loan loss provision in this quarter at RM7.1mil.
- With a write-back as well in the previous 1Q, this means that the total loan loss provision was a write-back of RM15.8mil in 1HFY13. Thus, there was no credit cost charge-off in these two quarters. Earlier, the company had indicated a targeted credit cost of circa 20bps for FY13F.
- AFG's topline growth remained healthy, but the main surprise in this quarter's net earnings was still the positive write-back in loan loss provision.
- We foresee less room to revise earnings upwards, given that loan loss provision is likely to normalise ahead. Maintain HOLD.
Source: AmeSecurities
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Introducing MY's First IPO Fund for Sophisticated Investors!
New Update. Discover investment communities that resonate with your ideas
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
.png)
Apps
Top Articles
1
2
The Alpha Trader
3
save malaysia!
4
Good Articles to Share
'Things will get worse' — PM Starmer says fixing UK problems will take time
5
Good Articles to Share
US Fed mortgage bond holdings play 'central' policy rule, paper says
6
Good Articles to Share
25-year-olds are running Kamala Harris’ social media campaign: Report
7
Good Articles to Share
SpaceX to return Boeing's Starliner astronauts from space next year
8
Good Articles to Share
Commuting in a kayak a breath of fresh air for Shanghai office worker
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
