Journey to Wealth
RHB Capital - RHB Capital : Validated by mimicry
- We maintain our BUY rating on RHB Capital Bhd (RHB Cap), with an unchanged fair value of RM8.60/share, based on an ROE of 12.3%, and a fair P/BV of 1.3x FY13F.
- Major competitor Malayan Banking (Maybank) had recently unveiled a new banking service called Maybank One Solution (Maybank One), which is a new kiosk banking concept that includes approval of personal loans within 10 minutes to 20 minutes (vs. a few days previously). Recall Maybank had alluded to planning a kiosk banking concept since early this year. Maybank One's kiosks banking concept thus mimics that of RHB Cap's kiosk banking niche, Easy.
- There will be seven services provided from Maybank One's kiosks: Personal Saver, Flexi Saver Plan, Personal Cash, Amanah Saham Bumi (ASB) Flexi Loan (unit trust financing), ASB Flexi Cash, Premium PA Plus and Domestic Travel Care. The types of products being offered are therefore similar to RHB Cap's Easy's ASB financing, personal loan, savings and insurance products.
- We expect Maybank One's kiosks banking to require some gestation time before taking off. Maybank currently has 25 kiosks, with a target to raise it to 33-35 by end-2012 and to 45 by end-2013. In contrast, RHB Cap already has 245 Easy kiosks nationwide.
- RHB Cap has been gaining market share in terms of ASB unit trust financing, rising nearly 3-fold to 25.4% currently from 9.3% three years ago in FY09, before Easy took off in a big way. The other two banks which are involved in ASB financing are Maybank, and CIMB Group Holdings (CIMB). We estimate Maybank's market share of ASB financing at 58%, and CIMB's at 16% currently.
- We expect Maybank to be more cautious in terms of its kiosks banking outlet expansion, given that there may be some cannibalisation effect. This is because Maybank currently has the largest number of branch network locally at 385, compared with RHB Cap's 197.
- So in a nutshell, we do not anticipate a major impact from Maybank's new kiosks banking concept. On the other hand, with Maybank now venturing into kiosk banking, this validates RHB Cap's Easy kiosk banking niche market.
- For RHB Cap, we expect the following to rerate its share price:- (a) stabilisation in gross impaired loans; (b) betterthan-expected loan loss provisions; (c) higher fee income from its investment bank; (d) reassurance on capital; and (e) newsflow on management team; (f) finalisation of rights issue for Bank Mestika.
Source: AmeSecurities
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