The Employees Provident Fund (EPF) increased its stake in banking group AMMB Holdings Bhd to 11.27%.
The institutional fund bought five million shares on Tuesday (Oct 11), bringing its cumulative shareholding to 373.19 million, up 57.94 million shares from 315.25 million shares (9.52% stake) on June 21.
EPF has been buying shares in the banking group over the past three months. Since July, it has purchased a total of 67.8 million shares.
Among other banking groups, EPF holds the most shares in Malaysia Building Society Bhd at 65.87%, according to Bloomberg data.
t is followed by RHB Bank Bhd (41.16%), CIMB Group Holdings Bhd (14.41%), Bank Islam Malaysia Bhd (13.98%), Malayan Banking Bhd (13.06%), Alliance Bank Malaysia Bhd (10.36%), Hong Leong Bank Bhd (9.19%) and Affin Bank Bhd (6.21%).
AMMB has 10 “buy” and five “hold” recommendations with an average target price (TP) of RM4.26. Its share price, which has risen 23.44% year-to-date, closed 0.51% higher at RM3.95 on Friday (Oct 14). At its closing, the group was valued at RM13.09 billion.
It has a dividend yield of 1.27% and a price-to-book value of some 0.7 times.
The banking group posted a net profit of RM419.9 million in the first quarter ended June 30, 2022 (1QFY23), compared to RM386.6 million a year earlier, due to lower impairment charges. However, revenue decreased to RM1.16 billion from RM1.24 billion due to lower trading and investment income.
AMMB, like other banking groups, will benefit from the increase in the overnight policy rate (OPR), which will drive net interest income growth.
“We expect AMMB’s net profit in 2QFY23 to be close to the level in 1QFY23, as the continuous increase in net interest income (from an expected improvement in loan growth and OPR hikes) would be offset by higher loan loss provisioning. However, the year-on-year net profit growth would be strong at circa 30% in 2QFY23, given the much lower net profit of RM321 million in 2QFY22. “We retain our ‘add’ rating on AMMB [with a TP of RM4.28], given its attractive valuation of 7.6 times CY23F P/E, which is below the sector’s 10.5 times. We also deem its FY23F dividend yield of 5% [as] attractive,” said CGS-CIMB Research in a note dated Aug 17.