MAYBANK (1155) - Malayan Banking Bhd - Extracting value from regional portfolio
Target RM12.00 (Stock Rating: ADD)
In a large-track session during Invest Malaysia, Maybank’s management outlined its key strategies in 2015. These include: (1) strengthening revenue growth, (2) solidifying its position in Asean, and (3) improving operational efficiency. The group is aiming for an ROE of 13-14% and loan growth of 9-10%, which we believe are achievable. Our DDM-based target price (COE of 10.3%; LT growth of 4%) is intact. We still rate Maybank as an Add, premised on the potential re-rating catalysts of (1) recovery in its businesses in Indonesia, (2) benefits from the regionalisation of its operations, and (3) market share gains in the investment banking business.
What Happened
Maybank’s large-track meeting during 2015 Invest Malaysia was hosted by its Group CFO, Mohamed Rafique Merican. The session attracted around 30 participants. The key focus was on the company’s strategies to further strengthen its regional portfolio and its KPIs for 2015.
What We Think
To strengthen its regional portfolio, we think that Maybank will focus on four areas – (1) “depth”, (2) “width”, (3) synergies among markets, and (4) operational efficiency. T0 achieve the “depth”, Maybank aims to increase its market shares and product offerings in all the markets it has presence in. For instance, the next phase of regional expansion will be for its insurance and Islamic banking businesses, which would complement its commercial banking operations. For “width”, we believe Maybank would need a plan to enter the commercial banking segment in Thailand, which is the only void in its portfolio in Asean. We think this would be achieved either via M&As or a new licence. The group has started to put more emphasis on improving its productivity over the past 1-2 years given the slower loan growth and thinning of net interest margins which have put pressure on its topline growth.
What You Should Do
Stay invested in Maybank to capitalise on the (1) recovery in its Indonesian operations, (2) benefits from the regionalisation of its operations, and (3) the market share gains by its investment banking unit.
Source: CIMB Daybreak - 24 April 2015
Target RM12.00 (Stock Rating: ADD)
In a large-track session during Invest Malaysia, Maybank’s management outlined its key strategies in 2015. These include: (1) strengthening revenue growth, (2) solidifying its position in Asean, and (3) improving operational efficiency. The group is aiming for an ROE of 13-14% and loan growth of 9-10%, which we believe are achievable. Our DDM-based target price (COE of 10.3%; LT growth of 4%) is intact. We still rate Maybank as an Add, premised on the potential re-rating catalysts of (1) recovery in its businesses in Indonesia, (2) benefits from the regionalisation of its operations, and (3) market share gains in the investment banking business.
What Happened
Maybank’s large-track meeting during 2015 Invest Malaysia was hosted by its Group CFO, Mohamed Rafique Merican. The session attracted around 30 participants. The key focus was on the company’s strategies to further strengthen its regional portfolio and its KPIs for 2015.
What We Think
To strengthen its regional portfolio, we think that Maybank will focus on four areas – (1) “depth”, (2) “width”, (3) synergies among markets, and (4) operational efficiency. T0 achieve the “depth”, Maybank aims to increase its market shares and product offerings in all the markets it has presence in. For instance, the next phase of regional expansion will be for its insurance and Islamic banking businesses, which would complement its commercial banking operations. For “width”, we believe Maybank would need a plan to enter the commercial banking segment in Thailand, which is the only void in its portfolio in Asean. We think this would be achieved either via M&As or a new licence. The group has started to put more emphasis on improving its productivity over the past 1-2 years given the slower loan growth and thinning of net interest margins which have put pressure on its topline growth.
What You Should Do
Stay invested in Maybank to capitalise on the (1) recovery in its Indonesian operations, (2) benefits from the regionalisation of its operations, and (3) the market share gains by its investment banking unit.
Source: CIMB Daybreak - 24 April 2015
