PBBANK Analysis:-

Excel – http://1drv.ms/1kkqxpg

My View:-

- Fair values/Market Timing:
  – 5Y DCF: 15.46 – 18.12 (MOS: -29% – 10%)
  – Absolute EY%:
    – FY13 (EPS: 1.161): Buy below 15.08, sell above 18.67 (MOS: -6.48%)
    – R4Q (EPS: 1.175): Buy below 15.27, sell above 18.90 (MOS: -5.19%)
    – FY14 (EPS: 1.178): Buy below 15.30, sell above 18.93 (MOS: -5%)
    – FY15 (EPS: 1.266): Buy below 16.45, sell above 20.36 (MOS: -2.4%)
  – By looking at the fair values, I think PBBANK is now over valued.
- PBBANK has been climbing up since Jul 2012 with couple of small corrections. As I forecasted in few months, PBBANK has been ranging somewhere around 20.00.
- In FY14-FY15, intense competition amongst financial institutions for market share as well as the need for higher capital conservation due to the requirements of Basel III capital framework, will continue to put pressure on pricing of products and return on equity. PBBANK growth will be slowing down, and this is proven from the declining ROE in the past 5 years.
  – Besides, growth in the profit from its retail operations has been subdued at 0.03% due to pressures on margin while its hire purchase segment’s profit for 1HFY14 declined 8.2%yoy to higher impairment allowance and NIM compression.
- With no near term catalyst,I will continue to hold and monitor PBBANK, but will not accumulate PBBANK at this moment. After holding PBBANK for almost 15 years, the dividend gains covered almost 95% of my cost. I will just let it float with so called "cost free".
- For latest Banking sector analysis, please visit http://www.midf.com.my/images/pdf/research-Report/Equity-Beat/2014/Banking%20Sector-1QCY14%20Results%20Wrap%20Up-MIDF-090614.pdf

Latest Financial – Q2 2014 Financial Report (24 Jul 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1693657

At the time of writing, I owned shares of PBBANK.