FIGURE 1: PUBLIC BANK BERHAD LAST 5 YEARS SHARE PRICE TREND

 

**analysis based on 2018 annual report.

1.       GENERAL INTRO: This counter core business is on various banking services. Public Bank is one of the major banks in Malaysia. Public Bank had good performance in last five years, earning per share increased steadily from 123.7 to 144.4sen. Company management is good, with return on equity 14.8% and cost to income ratio 33%. With recent dip in the share price, now may be a good time to invest in this counter when P/E ratio still at relatively low level (13.59). Overtime, share price may rebound making it too expensive. Although total annual dividend payout of 70sen per share is quite high, at current share price dividend yield is around 3.62% only, not too attractive to invest for the purpose of dividend return. Could be worthy to invest looking forward to future appreciation of share price.

 

2.       NOTABLE POINTS:

a.       In the 2018 report, Public Bank claim to be 3rd largest bank in Malaysia, serving about 10 million customers. It is the second largest company on Bursa Malaysia by market capitalisation, return on equity 14.8%, lowest cost to income ratio among Malaysia banks (33%), whereas industry average is around 44.8% . Also, it has efficient work force that created "pre-tax profit per employee" of RM379,000/employee, whereas industry average is lower at RM305,000/employee.

b.      Have good management and caring of well-being of staff, the Group has a staff force of over 18,000, and about half of them have been serving the group for over 15 years. These capable staff are valuable asset of the company.

c.       In 2018, the appreciation of share price together with the dividend received by shareholder translated into a combined return of 22.3% for the year.

 

3.       IS THIS COUNTER A STRONG GROWTH STOCK? 

a.       REVENUE RANGE (million): ~22041 million in 2018 annual report, this is a high revenue company.

b.      SHARE PRICE: from 2013-2018, share price trend inreasing from RM14 to RM25, in 2019 dropped to RM19

c.       EARNING PER SHARE (EPS): earning per share in last 5 years were on increasing trend, EPS were increasing from 123.7 to 144.4 sen per share.

d.      FUTURE POTENTIAL/PROSPECTS: very dependable and reliable counter, share price expected to be stable and increasing.

e.      CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 241 million, around 0.06% of total assets.

 

4.       IS THIS A STRONG DIVIDEND STOCK?     

a.       DIVIDEND YIELD: in 2018 report, Public Bank declared a total dividend payout of 69 sen per share, amounts to dividend yield of 3.62 % based on current share price.

b.      CONSISTENCY: consistent dividend payout, last five years (2014-2018) dividends declared range from 54 to 69 sen per share.

 

5.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive, around RM 13319 million, equivalent to RM 3.43 per share

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is well supported by institutional investors, there are 29 institutional investors at top 30 major shareholders list, including EPF (10.81%), Amanah Saham Malaysia (1.12%), Kumpulan Wang Persaraan (3.13%) and few insurance companies and investment funds.

 

Disclaimer: The content of the blog posts are for sharing purpose only. Readers are encouraged to carry out further research and analysis as well as follow up latest update information before making any investment decisions.

 

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