Tuesday, October 18, 2011

OSK Research Neutral on Public Bank, FV RM14

KUALA LUMPUR: OSK Research has a Neutral stance on Public Bank and a fair value of RM14.

It said on Tuesday, Oct 18 that Public Bank's 9MFY11 earnings expanded by 18.4% y-o-y while 3QFY11 grew sequentially at 2.1% q-o-q.

'Results were in line with both consensus and our estimates with 9MFY11 results representing 75.8% and 75.6% of consensus and our full year FY11 estimates. The group registered a sequential net profit growth of 2.1%,' it said.

OSK Research said however the growth was largely fueled by lower loan loss provisions (-17.8% q-o-q). Pre-provision operating profit contracted 0.3% q-o-q vs 2Q11's 7.3% growth and 2Q10 to 2Q11 average quarterly growth of 2.1%.

'Continued pressure on NIMs resulted in a slight sequential contraction in net interest income while volatility in the equity markets negatively impacted the group's sale of new unit trust and brokerage income,' it said.

OSK Research said despite the stock's superior asset quality and hence resilience in riding through economic downturns, it thinks that the market has largely priced that into its premium valuations.

'Maintain NEUTRAL and Fair Value of RM14.00 (ROE of 24% and implied FY12 PBV of 2.90 times),' it said.

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