CIMB (CIMB MK, BUY, TP: MYR6.40)
1Q22: Strong Sequential Improvement; Keep BUY
Keep ‘BUY’ rating and with the target price (TP) of MYR6.40, 24% upside with c.4% yield. 1Q22’s results beat expectations, with strong topline growth, sustained cost controls, and significantly lower provisions being key standouts. Loan growth is gaining pace while the structured cost take-outs have also led to further improvement in CIR. Should asset quality continue to hold up in the quarters ahead, potential lowering of credit cost guidance presents upside risk to earnings. The healthy improvement in underlying operations is catalyst for positive share price re-rating.
AMMB (AMM MK, BUY, TP: MYR4.40)
Resumes Dividend Payment; Keep BUY
‘BUY’ call on this counter, with new MYR4.40 TP from MYR4.00, 21% upside and c.5% FY23F (Mar) yield. FY22 results were above expectations, with successful capital rebuild paving the way for a resumption of dividend payout. Management is targeting FY23F ROE of c.10%, underpinned by healthy underlying profits and lower credit cost. With issues on capital and oil & gas exposures dealt with, it is expected that share price to re-rate given its undemanding valuation of 0.7x FY23F P/BV.
Alliance Bank Malaysia (ABMB MK, BUY, TP: MYR4.20)
Dividend Payout Has Normalised; Keep BUY
The research house has maintained ‘BUY’ call on Alliance Bank, with new GGM-derived MYR4.20 TP from MYR4.00, 17% upside and c.6% FY23F (Mar) yield. Alliance Bank Malaysia’s FY22 results were within consensus’ expectations. A second interim DPS of 10.2 sen was declared in the quarter, bringing FY22 DPS to 18.50 sen (50% payout ratio). Moving forward, management targets for FY23F ROE to be >10%, and remains committed to accelerating growth in its consumer, SME, and Islamic banking businesses.
Power Root (PWRT MK, BUY, TP: MYR2.00)
Getting Out Of The Woods; Stay BUY
‘BUY’ call is retained on this consumer staple counter, new TP of MYR2.00 from MYR1.88, 31% upside with a c.5% FY23F (Mar) yield. Power Root’s FY22 earnings beat expectations, on better-than-expected export sales and margins. Its positive export sales recovery momentum and cost pass-through should propel earnings growth to 70% YoY in FY23F, whilst the stronger USD should be earnings-accretive for the company. Its current valuation is attractive and has yet to fully reflect the recovery prospects. PWRT is applauded for its established brand equity and efficiency-hungry management team.
Malaysian Resources Corp (MRC MK, BUY, TP: MYR0.44) – UPGRADE
Brighter Job Replenishment Prospects; Upgraded To BUY
This counter is upgraded to ‘BUY’ rating from Neutral, new MYR0.44 TP from MYR0.38, 22% upside. Malaysian Resources’ 1Q22 core earnings of MYR14m comprised 48% and 40% of our and Street full-year estimates, amid larger-than-expected contributions from Light Rapid Transit 3. Our upgrade stems from its better job replenishment prospects – from Mass Rapid Transit 3 and waste-to-energy projects – as jobs are expected to flow through. As c.45% of its on-going projects are in advanced phases, the fluctuation in raw material prices should not affect its numbers greatly.
