Maybank IB maintains buy on BIMB, up targets to RM5

KUALA LUMPUR: Maybank Investment Bank Research has maintained its “buy” call on BIMB Holdings Bhd with a higher SOP-derived target price of RM5 from RM4.70 previously.

The research house said BIMB’s FY16 results were within expectations and it has have revised up its earnings by 3% for FY17 and FY18 respectively on the back of higher margins.  

It added that BIMB’s fundamentals remained very much intact and continued to benefit from twin engines of growth from both the Islamic bank and Takaful business. 

“Against a higher FY17E return on equity of 12.8% for Bank Islam versus 12.3% previously, we raise our CY17 price-to-book value (P/BV) multiple peg to 1.6 times from 1.5 times. We continue to tag on a P/BV of 4.2 times for Takaful,” Maybank said. 

Maybank noted that BIMB’s management guided for a slowdown in financing growth to 8% in FY17, largely on the back of prudence and slower industry growth, but this has already been anticipated – Maybank maintains its forecast of 8.4%. 

Spreads meanwhile, are expected to stay above 2.7% (2.74% in 4Q16) and to achieve this, management believes it has room to lower the floating/ fixed rate portfolio mix from 86:14 currently to 80:20, given that interest rates are anticipated to be flat at best. 

Credit costs meanwhile are expected to creep up and we have imputed 28 basis points in FY17 versus 25 basis points in FY16,” it said.