Journey to Wealth
Alliance Financial Group - Indicators holding up well HOLD
- At our recent company visit, AFG reaffirmed its overall loans growth target of 14% to 15% for FY13F. There have been no significant dips in its loan applications and approvals in recent months, which continue to hold up well.
- For the business borrowers' segment, AFG had earlier experienced a slowdown with business borrowers turning cautious in March-April 2012 and generally undergoing inventory destocking activities. Trade financing segment was also soft in the beginning of the year.
- However, we get the sense that the business borrowers' segment has been relatively stable since then with business borrowers having done some levels of restocking. This is positive as it may indicate no further reduction in utilisation of working capital facilities.
- Net interest margin (NIM) is likely to continue to be affected by competitive pressure although we believe AFG has not been aggressive in terms of pricing generally. The guidance is a NIM compression of 10bps YoY for FY13F. The company intends to boost CASA and transactional banking to counter NIM pressure.
- The company is also maintaining its long-term target of fee income ratio of 30%. - The company alluded to no major signs of stress in any particular parts of its loan portfolio. The company is currently monitoring unemployment levels, as well as any particular increased usage of credit cards and overdraft balances, but there have been no particular signs of distress so far.
- The company's credit cost guidance is 20bps, with some positive impact expected from full adoption of FRS139 ahead.
- AFG's share price has done well, with it now being close to our fair value of RM4.40/share. Given the less than 15% upside to our fair value, we are maintaining our HOLD rating.
Source: AmeSecurities
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1 person likes this. Showing 2 of 2 comments
understood DBS owned shares in AFG but there are no news/rumour AFG would change to DBS.
2012-08-14 13:15
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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....
NavinShah
Just wait my dear investors. When this AFG, name is changed to DBS MALAYSIA. You will see the run away price of the share. The fair value, during that time will be RM10-00 to RM15-00 pe share. You may laugh today, but I well laugh last and it will the best.
2012-08-14 12:45