From today's Star Paper:

PETALING JAYA: Banks are expected to outperform the market in 2021 as the economy recovers with better availability of Covid-19 vaccines in the second half of 2021, says RHB Research.

The research unit has forecast the sector’s net profits to rebound by 27% in 2021 – although this would still be 12% below pre-pandemic levels – after dipping 30% in 2020.

The uplift in earnings is mainly on the year-on-year lower (still somewhat elevated) credit cost, as RHB Research expects most banks to bring forward much of their respective provisions to 2020.

Asset quality will again be the focal point after months of delay caused by various debt-repayment relief programmes.

Also, it noted that despite recently unexciting financial results, bank stocks have rallied 37% since the start of November, as investors disregard the near-term uncertainties and instead focus on the expectation of a vaccine-induced recovery.


The recent strength in share prices is almost entirely driven by price-to-book value (P/BV) multiple expansion (valuation re-rating), while there has been little to no changes in sector fundamentals – the outlook remains uncertain, with provisions still elevated.

RHB Research also said there appeared to be a disconnection between the “what-has-been” (fundamentals) and “what-will-be” (valuation) for bank stock valuations.

It said the rotation-to-cyclical play will gain more traction in 2021, as investor confidence improves along with the economic recovery.

In its view, the rotational play will likely be at full force when a vaccine is finally approved and mass deployment begins.

Meanwhile, environmental, social and governance (ESG) issues will gain more traction and be one of the key focus areas by banks.

Areas such as responsible lending and better corporate social responsibility will very much be under the spotlight. It is expected that more banks will announce their respective ESG frameworks and strategies in 2021.

The research unit is maintaining an overweight call on the sector, with Hong Leong Bank Bhd as its defensive pick with a target price of RM21.90. It has downgraded Public Bank Bhd to a neutral, largely on the grounds of valuation. Its target price is RM21.60.

It also has buy calls on Malayan Banking Bhd with a target price of RM10 and AMMB Holdings Bhd with a target price of RM4.20, which are its recovery picks as both should benefit more from the normalisation of credit costs.

It has upgraded CIMB Group Holdings Bhd to a buy with a target price of RM5.10. The low base in 2020 will pave the way for a stronger rebound while its current valuation is still more than 30% below its big-cap peers.

https://www.thestar.com.my/business/business-news/2020/12/18/bank-earnings-expected-to-rebound-next-year

Thanks to apple168 for the kind advice on 28/2/20 4:24pm.

Definitely a growth company. Planning new production lines for winter clothing. Higher margin compared to sport attires.

11.11 boosted Nike sales. Positive for Magni.

US$:RM is now 4.22:1. Stronger dollar is better for Magni. RM6 is not far away.

Management manipulate the price to buy back at lower price. Do not be con to sell at lower price. Keep to collect dividend. Still a good fundamental company.

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