KUALA LUMPUR (March 18): The share price of Public Bank Bhd, a banking stock that is perceived to be solid like a rock, is now falling like a rock.
The banking group's shares slid further today, down 6.33%, or 88 sen, to RM13.02 — the lowest level since August 2013. Year to date, it has plunged 33% in less than three years.
Banking stocks have come under selling pressure given it is a cyclical sector that is highly sensitive to the economic weather. The current harsh economic weather raises concerns on banks’ earnings prospects and asset quality as well.
Most of its banking peers are heading south as well, however, Public Bank appears to lose the most.
Still, Public Bank is currently trading at above one time book value while other banks on Bursa Malaysia are mostly below that level. Based on its book value per share of RM11.23, Public Bank still fetches a premium price-book value of 1.16 times.
Analysts said it could be the premium valuation that the bank has enjoyed for long; it now becomes the selling target as investment funds need liquidity to meet redemptions, they will have to let go any shares.
After the sharp fall, Public Bank’s dividend yield has gone up to 5.6% from below 3% previously.
At today’s closing of RM13.02, Public Bank is way below most analysts’ target prices, according to Bloomberg. The average target price for Public Bank is RM18.80 with the lowest at RM13.85.