MAYBANK (1155) – Fundamental Analysis (4 Mar 2015)
MAYBANK Analysis:-
Excel – http://1drv.ms/1GiyDb7
Notes – http://tinyurl.com/kkqt2c9
My View:-
Valuation:
Absolute EY%:
Trailing:
FY14 (EPS: 0.742) – Fair value 9.94 (Fair Value Uncertainty: HIGH)
R4Q (EPS: 0.724) – Fair value 9.71 (Fair Value Uncertainty: HIGH)
Forward:
FY15 (EPS: 0.731) – Fair value 9.8 (Fair Value Uncertainty: HIGH)
FY16 (EPS: 0.778) – Fair value 10.43 (Fair Value Uncertainty: HIGH)
EPS applied to reach the current stock price (9.35): 0.697
Dividend Discount Model
Base Scenario: 9.21 (Fair Value Uncertainty: HIGH)
Good Scenario: 9.03 (Fair Value Uncertainty: HIGH)
Bad Scenario: 8.85 (Fair Value Uncertainty: HIGH)
Ugly Scenario: 8.69 (Fair Value Uncertainty: HIGH)
Residual Income Model (This model is very defensive. I consider the derived price as the bare minimum price)
Base Scenario: 9.03
Good Scenario: 7.33
Bad Scenario: 5.78
Ugly Scenario: 4.36
In my opinion, MAYBANK is currently fully valued. Compare to my previous valuation, the fair values are reduced due to declining of ROE and stagnant dividend payout growth.
Despite Net profit is unexpectedly strong (+20.1%qoq; +11.5%yoy), MAYBANK’s ROE declined from 14.2% (FY13) to 12.7% (FY14).
Please note that my ROE calculation is slightly different from other analysts, but disregard formula variant, MAYBANK ROE has been declining in these few years.
I think this is a common issue in Malaysia banking
For latest Banking analysis, please refer: http://tinyurl.com/lv5yp9q
For FY15, management has guided an ROE of 13-14%, Group loan growth of 9-10% (Malaysia: 8-9%, Singapore: 8-9% and Indonesia: 13-15%), Group deposit growth of 9-10%, CI ratio of 47-48%, NIM contraction of 8-10bp and credit cost of not more than 0.30%.
Due to its strong dividend yield, healthy liquidity and strong capital position, I will continue to hold MAYBANK, and accumulate MAYBANK without increasing my average price too much.
Latest Financial – Q4 2014 Financial Report (26 Feb 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1885573
At the time of writing, I owned shares of MAYBANK.
https://lcchong.wordpress.com
MAYBANK Analysis:-
Excel – http://1drv.ms/1GiyDb7
Notes – http://tinyurl.com/kkqt2c9
My View:-
Valuation:
Absolute EY%:
Trailing:
FY14 (EPS: 0.742) – Fair value 9.94 (Fair Value Uncertainty: HIGH)
R4Q (EPS: 0.724) – Fair value 9.71 (Fair Value Uncertainty: HIGH)
Forward:
FY15 (EPS: 0.731) – Fair value 9.8 (Fair Value Uncertainty: HIGH)
FY16 (EPS: 0.778) – Fair value 10.43 (Fair Value Uncertainty: HIGH)
EPS applied to reach the current stock price (9.35): 0.697
Dividend Discount Model
Base Scenario: 9.21 (Fair Value Uncertainty: HIGH)
Good Scenario: 9.03 (Fair Value Uncertainty: HIGH)
Bad Scenario: 8.85 (Fair Value Uncertainty: HIGH)
Ugly Scenario: 8.69 (Fair Value Uncertainty: HIGH)
Residual Income Model (This model is very defensive. I consider the derived price as the bare minimum price)
Base Scenario: 9.03
Good Scenario: 7.33
Bad Scenario: 5.78
Ugly Scenario: 4.36
In my opinion, MAYBANK is currently fully valued. Compare to my previous valuation, the fair values are reduced due to declining of ROE and stagnant dividend payout growth.
Despite Net profit is unexpectedly strong (+20.1%qoq; +11.5%yoy), MAYBANK’s ROE declined from 14.2% (FY13) to 12.7% (FY14).
Please note that my ROE calculation is slightly different from other analysts, but disregard formula variant, MAYBANK ROE has been declining in these few years.
I think this is a common issue in Malaysia banking
For latest Banking analysis, please refer: http://tinyurl.com/lv5yp9q
For FY15, management has guided an ROE of 13-14%, Group loan growth of 9-10% (Malaysia: 8-9%, Singapore: 8-9% and Indonesia: 13-15%), Group deposit growth of 9-10%, CI ratio of 47-48%, NIM contraction of 8-10bp and credit cost of not more than 0.30%.
Due to its strong dividend yield, healthy liquidity and strong capital position, I will continue to hold MAYBANK, and accumulate MAYBANK without increasing my average price too much.
Latest Financial – Q4 2014 Financial Report (26 Feb 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1885573
At the time of writing, I owned shares of MAYBANK.
https://lcchong.wordpress.com
