发帖
雷达卡
Malaysia Banks Sector
DECREASE TARGET PRICE
Most expensive in the world
■
We maintain our UNDERWEIGHT call on the sector as we believe its
premium valuations cannot be sustained and it is over-owned by
foreigners, while the possibility of further cuts in street earnings
estimates could weigh on price performance. Our top
UNDERPERFORM ideas are Public Bank and HL Bank, the two most
expensive Malaysian banks. BCHB remains NEUTRAL but we set our
buy trigger at RM5.50/share. We continue to like Alliance Financial
Group and HL Financial Group as less expensive proxies for HL Bank.
■
Malaysian banks account for some 29% of total foreign holdings in
Malaysia, matching historical peaks of 30% (reached in 1999-2000). We
view this as a major risk and could contribute to share price
vulnerability for well-owned stocks. Public is now the most widely
owned Malaysian stock by foreigners, accounting for 11.3% of total
foreign money in the country, followed by BCHB (9.8%).
■
We have lowered our earnings estimates for the banks by up to 25% for
2008-10E to factor in slower loan growth, weaker non-interest income
and higher credit costs. We have also reduced our target prices to
factor in these cuts in earnings estimates and a higher cost of equity.
■
Street earnings downgrades have been moderate so far. We expect a
pick-up in downgrades to street earnings estimates for the banks, with
growing evidence of a loan growth slowdown and higher default rates.
■
Malaysian banks are trading on an average P/B of 1.5x, the highest in
Credit Suisse’s global banking universe. Public stands out with a P/B
of 2.9x. Malaysian banks trade on an average P/E of 10x, almost at a
record high 57% premium to regional peers. Within Malaysia, Public
(13x P/E) and HL Bank (11x P/E) are the most expensive.
Most expensive in the world
Over-owned by foreign investors
In total, Malaysian banks account for some 29% of total foreign holdings in Malaysia,
matching historic peaks of 30% (reached in 1999-2000). We view this as a major risk and
it could contribute to share price vulnerability for the stocks that are well owned by
foreigners. Those that stand out are Public and BCHB. Public is now the most widely
owned Malaysian stock by foreigners accounting for 11.3% of total foreign money invested
in the country, followed by BCHB (9.8%).
Lowering earnings estimates and target prices
We have lowered our bank earnings estimates by up to 25% for 2008-10E to factor in
slower loan growth, weaker non-interest income and higher credit costs. We also reduced
our target prices to factor in the cuts in earnings estimate and higher cost of equity.
More downside risk to street earnings
So far, the street’s net profit estimates for the banks have been reduced by 8.6% for (T+1)
and 7% for (T+2) over the past six months while the market’s (ex-banks) net profit
forecasts have been cut by a larger 9.6% for (T+1) and 14.6% for (T+2). We expect a pickup
in the downgrades of street earnings estimates for the banks with growing evidence of
a slowdown in loan growth and higher delinquency rates. The global economic crisis could
take its toll on the Malaysian economy by early 2009E and should translate into a
slowdown in economic growth and rise in unemployment. As the price performance of
banks has historically been highly correlated with street earnings momentum, we expect
potential downgrades in street’s earnings to drive underperformance of the banks.
How bad can it get?
Our earnings expectations and target prices for the Malaysian banks are based on our
view that this financial crisis will not be as severe as the Asian Financial crisis (1997-98).
Our view is supported by some key differences between the present financial turmoil and
the Asian financial crisis such as : 1) the economy is in better shape today and we are not
forecasting a recession, 2) there is ample liquidity in the banking system (loan-to-deposit
ratio of 0.75x now versus 0.92x in 1998), 3) a stable interest rate and currency, 4) a better
capitalised banking system, 5) no housing bubble and 6) no excessive lending in the runup
to the crisis (loan growth has been modest at 6-11% over the past three years).
Valuations – the most expensive in the world!
Malaysian banks are trading on an average P/B of 1.5x, the highest in CS’s global banking
universe. For similar ROEs to the Malaysian bank average of 15% or better, banks in
China, Pakistan, Indonesia, Australia and Hong Kong offer better value. In particular,
Public stands out with a P/B of 2.9x. Malaysian banks trade on an average P/E of 10x,
almost at a record high 57% premium to regional peers. Within Malaysia, Public (13x P/E)
and HL Bank (11x P/E) are the most expensive.
Maintain UNDERWEIGHT call on the sector
We maintain our UNDERWEIGHT call on the sector, as we believe its premium valuations
cannot be sustained, stocks are over-owned by foreigners and the possibility of further
street earnings estimate cuts could weigh on price performance. We reiterate our
UNDERPERFORM call of Public and also downgrade HL Bank to an UNDERPERFORM
(from Neutral). BCHB remains a NEUTRAL but we set our buy trigger at RM5.50/sh (at
RM5.50, it would offer 30% potential upside to our target price of RM7.20/sh and would be
trading on 1.1x P/B , 7.9x 2009E P/E).
282670.pdf
(940.91 KB, 需要: 500 个论坛币)
京公网安备 11010802022788号
