RHB has shared its sector and stock pick for the day, and we would like to update readers on today’s selection.
Banks
Navigating 2H22 Challenges With Prudence
Sector Update
Stay OVERWEIGHT; Top Picks: CIMB, AMMB, and Alliance Bank Malaysia (ABMB). Banks are keeping a watchful eye on rising inflation and geopolitical tensions as they head into 2H22. This is reflected in their guarded guidance on loan growth and credit costs despite healthy trends in 2Q22. Our FY22 sector earnings growth is revised to 8% (from 5.5%) on assumptions of better NIMs and slightly lower provision charges. RHB likes CIMB, AMMB (both for traction in ROE recovery and undemanding valuation), and ABMB for its healthy business momentum and gradual release of management overlays
Yinson
Frontrunner For Agogo Project? Keep BUY
Company Update
Reiterate BUY and MYR2.83 TP, 25% upside with c.1% FY23F (Jan). Upstream reported that Yinson has emerged as the frontrunner vying for Eni’s Agogo FPSO vessel contract. This is positive for Yinson, as it could lead to another project win by the end of this year. Our estimate conservatively suggests an MYR0.22 increased TP, if a deal is struck.
Kelington Group
Still Robust Tender Pipeline; Keep BUY
Company Update
Keep BUY, higher MYR1.71 TP from MYR1.69, 26% upside and c.1% yield. We raise our forecasts on incrementally higher orderbook replenishment assumptions and after baking in the new 10-year on-site gas supply contract. Our target P/E is lowered to 25x from 28x, reflecting a more cautious sector sentiment. This is still at +1SD of historical mean, as Kelington Group is set to deliver strong earnings growth into FY24F.
