We maintain our OP call and GGM-derived PBV TP of RM5.20 (COE: 10.2%, TG: 4.25%, ROE: 9.0%). The group hosted a briefing to highlight its FY29 aspirations (return on assets, cost efficiency, dividends) and indicative strategies to achieve them. It is also hoped that operating in a stronger fundamental shape, the group could command higher trading values at 1.0x PBV (vs 0.7x at present).
The group conducted its 2024 Investor Strategy Day to outline its long- term plans and targets. Our key takeaways are as follows:
Forecasts. Unchanged
Maintain OUTPERFORM and TP of RM5.20, based on an unchanged GGM-derived CY25F PBV of 0.80x (COE: 10.2%, TG: 4.25%, ROE: 9.0%). We continue to believe our thesis that AMBANK is still in a better shape for consolidation. On top of securing sustainable ROEs of c.9% (since FY19 of <9%), the group may now be in a better position to deliver better dividend pay-outs of c.40% (from 35%) which we are anticipating. The group is also one of the leaders in terms of SME profile, which is touted as a high-growth segment that could accelerate market share growth for the group should we anticipate better economic prospects in the medium term. There is no adjustment to our TP based on ESG given a 3-star rating as appraised by us.
Risks to our call include: (i) higher-than-expected margin squeeze, (ii) lower-than-expected loans growth, (iii) worse-than- expected deterioration in asset quality, (iv) slowdown in capital market activities, (v) unfavourable currency fluctuations, and (vi) changes to OPR.
Source: Kenanga Research - 20 Jun 2024
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AMBANKCreated by kiasutrader | Nov 12, 2024