More bullish on Public Bank's recovery

KUALA LUMPUR: Analysts are revising higher their earnings assumptions on Public Bank Bhd following the recent earnings result, which indicated the group was en route to recovery.

For the first quarter of 2021, the group's net profit was RM1.53mil, a 15.1% jump over the previous corresponding quarter.

MIDF Research, which maintained its "buy" call, said while the earnings recovery in 1Q was unsurprising, the pace of earnings growth was somewhat unexpected given the implementation of MCO2.0 in the quarter.

It added that this suggests the group will weather the recently imposed MCO3.0 and that its asset quality and conservative approach to its credit profile will mean it will weather the short-term stress.

"With the expectation that the situation is turning around especially with the rollout of the Covid-19 vaccine and recovery in the GDP, we are maintaining our 'buy' with revised TP of RM5.10 (from RM4.85) as we rollover our valuation to FY22, pegging its FY22 BPS to PBV of 2.0x," said MIDF.

TA Research is also turning more bullish on Public Bank's recovery, revising higher its FY21-23 net profit forecasts.

After rolling forward valuations to FY22 and post-updating beta assumption, it maintained its target price at RM5.

It reiterated its 'buy' call based on an implied price-book value of about 1.79x based on the Gordon Growth Model.

Meanwhile, Maybank Investment Bank Research said the 1Q results exceeded its expectation at 27% of its full-year forecast.

It maintained its "buy" recommendation and raised its FY21/22 net profit forecasts by 5% and 2% respectively on the back of the earnings result.

"Our TP is maintained at MYR4.65 on an unchanged FY22 PBV of 1.7x supported by a FY22 ROE of 12.3% (12.2% previously)," it said.
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Public Bank , MIDF , TA Research , Maybank IB


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