Kenanga Research stated AMMB should continue to report stronger earnings due to credit cost advances with possible eagerness from the successful disposal of its AmGeneral stake to Liberty Insurance.
The research house maintained its “Outperform” (OP) rating on AMMB Holdings Bhd at RM3.98 with a higher target price (TP) of RM4.75 (from RM4.35) and said AMMB’s 1QFY23 earnings of RM419.2 million (+8%) came within expectations.
“Participation in the enlarged entity could yield a better payoff for the group in the long-term, calling for higher ROE targets.
“Maintain OP with a higher GGM-derived TP of RM4.75 (from RM4.35) on better long-term assumptions,” it said in a note on Thursday (Aug 18).
Kenanga said interest in the stock will continue to hold from its earnings traction recovery and with targeted ROE levels of 10%, a level not seen since 2017, where its valuations were closer to 0.9x, adding: “that said, we do not expect special dividends from the disposal of AmGeneral stake as the group only registered a net disposal gain of RM5m. “There is no adjustment to our TP based on ESG of which it is given a 3-star rating as appraised by us,” it said.
