KL Trader Investment Research Articles

HwangDBS Research - 1 August 2012

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Publish date: Wed, 01 Aug 2012, 10:18 AM
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This is a personal investment blog where I keep important research articles relating to KLSE companies.

Banking - June loan stats: Good momentum for second consecutive month
Loan growth was sustained in June (+1.5% mom; +12.5% yoy; +6.4% YTD-June) after a slow 1Q12. Retail loan growth (+1.2% mom) still lagged business loan growth (+1.9% mom) but it has clearly picked up pace, while business loan growth moderated slightly after a sharp rebound in May.

Applications and approvals remained encouraging for the business segment especially for construction loans, which started to pick up early this year. On a six-month moving average basis, applications and approvals for construction loans rose 19% yoy and 54% yoy.

Meanwhile, applications for working capital loans remained healthy, growing 29% yoy (six-month moving average). The strong pipeline should support loan growth in the coming months. We maintain our 2012 loan growth assumption at 12%.

Deposit growth grew 1.1% mom led by 1.0% mom growth in CASA, while fixed deposits growth was flat. Net loan-to-deposit ratio remained stable at 78% and CASA to total deposits ratio was unchanged at 25%. Risk-weighted capital ratio and core capital ratio remained robust at 14.7% and 12.9% respectively. Gross NPL ratio improved to 2.2% (May-12: 2.4%). The level of impaired loans fell due to continued recoveries and write-offs by some banks.

Our top picks are Maybank (TP: RM10.60) and Hong Leong Bank (TP: RM16.00). We like Maybank which offers growth and dividend yields. Valuations remain attractive at 1.9x CY12 BV (sector average: 2.0x) with 6% dividend yield (based on a 70% payout). We like Hong Leong Bank as it continues to reap post-merger synergies. The key risk to our forward earnings for banks would be timing of ETP projects and excessive pressure on NIM.

 

Traders Spectrum – Sense & Response
Naim Holdings

Strong earnings delivery could trigger a re-rating. Current share price implies its construction and property business is valued at 1.3x PE. Proxy to booming infrastructure spending in Sarawak, where it is a leading contractor.

 

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1 person likes this. Showing 1 of 1 comments

Alwin Yau Min Sin

Good Buy ? I wonder ....any comments

2012-08-01 11:30

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