KINDLY REFER TO THE LAST PAGE OF THIS PUBLICATION FOR IMPORTANT DISCLOSURES 30 September 2013 | Initiate coverage BIMB Holdings Berhad NEUTRAL All the positives have been priced in Target Price (TP):RM 4.40 INVESTMENT HIGHLIGHTS • We initiate coverage on BIMB Holdings (BHB) with a NEUTRAL call at a TP of RM4.40 based on 1.8x PBV. • We believe that the positives on the stock, including the news flow of it acquiring 49.0% equity stake in BIMB from DFG and LTH, have been priced in. • Based on BHB’s 1HFY13 profit before zakat and taxation (PBZT) growth, it is on track to achieve its ROE target (based on PBZT) of 20.0% for FY13. • Strong personal financing growth in the last three quarters led to a brisk expansion in loan base. Strong 1HFY13 PBZT growth of 18.0%yoy. Annualising BHB’s PBZT for 1HFY13, it is on track to achieve its FY13 ROE target of 20.0%. For 1HFY13, BHB’s net profit improved compared to 1HFY12. This was contributed by higher net income and lower impairment for loan losses. The Group’s higher net income for 1HFY13 was driven by higher income from investment of depositors’ funds and income from investment of shareholders’ funds. The rise in income from investment of depositors’ funds was driven by net financing growth of 9.6%yoy. Meanwhile, income growth from investment of shareholder’s funds was supported by higher net gains from fx transactions and higher fees and commission. Also, driving the increase was a 14.7%yoy growth in income from Takaful business. Customer deposits grew at CAGR of 13.0% over the past five years. In FY12, customer deposits grew 86.2%yoy to RM32.4b. For 1HFY13, current and savings deposits (CASA) grew 6.2%yoy. The Group’s CASA ratio of 36.5% as at end 1HFY13 was higher than the industry’s CASA ratio of 26.6% (as at end May’13). Bank Islam (BIMB) the main revenue and profit driver for BHB. For the past three financial years (FY10-FY12), BIMB has consistently contributed at least 80.0% of BHB’s PBZT (Refer Figure 1). For 1HFY13, BIMB contributed 79.1% of BHB’s revenue and 80.2% of BHB’s PBZT. Meanwhile, Takaful Malaysia, BHB’s 60.96% owned subsidiary contributed around mid-teen percentages to BHB’s PBZT for the past three financials (FY10-FY12). In 1HFY13, Takaful Malaysia’s contribution to BHB’s PBZT was higher at 20.5%. RETURN STATS Price (27 Sept ‘13) RM4.68 Target Price RM4.40 Expected Share Price Return -6.0% Expected Dividend Yield +3.1% Expected Total Return -2.9% STOCK INFO KLCI 1,776.16 Bursa / Bloomberg 5073 / BIMB MK Board / Sector Main/ Finance Syariah Compliant Yes Issued shares (mil) 1,066.8m Par Value (RM) 1.00 Market cap (RM’m) 4,992.6 Price over NA 2.4x 52-wk price Range RM2.80-RM5.03 Beta (against KLCI) 1.14 3-mth Avg Daily Vol 0.88m 3-mth Avg Daily Value RM3.87m Major Shareholders Lembaga Tambung Haji 51.17% EPF 9.72% Yayasan Pelaburan PP 5.42%
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BIMB Holdings Berhad NEUTRAL - klse.i3investor.com fileMIDF EQUITY BEAT Monday, 30 September 2013 2 Table 1: Investment Statistics *Financial year end has been changed from June to
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KINDLY REFER TO THE LAST PAGE OF THIS PUBLICATION FOR IMPORTANT DISCLOSURES
30 September 2013 | Initiate coverage
BIMB Holdings Berhad NEUTRAL All the positives have been priced in Target Price (TP):RM 4.40
INVESTMENT HIGHLIGHTS
• We initiate coverage on BIMB Holdings (BHB) with a
NEUTRAL call at a TP of RM4.40 based on 1.8x PBV.
• We believe that the positives on the stock, including the
news flow of it acquiring 49.0% equity stake in BIMB from
DFG and LTH, have been priced in.
• Based on BHB’s 1HFY13 profit before zakat and taxation
(PBZT) growth, it is on track to achieve its ROE target (based
on PBZT) of 20.0% for FY13.
• Strong personal financing growth in the last three quarters
led to a brisk expansion in loan base.
Strong 1HFY13 PBZT growth of 18.0%yoy. Annualising BHB’s
PBZT for 1HFY13, it is on track to achieve its FY13 ROE target of
20.0%. For 1HFY13, BHB’s net profit improved compared to 1HFY12.
This was contributed by higher net income and lower impairment for
loan losses. The Group’s higher net income for 1HFY13 was driven by
higher income from investment of depositors’ funds and income from
investment of shareholders’ funds. The rise in income from investment
of depositors’ funds was driven by net financing growth of 9.6%yoy.
Meanwhile, income growth from investment of shareholder’s funds
was supported by higher net gains from fx transactions and higher
fees and commission. Also, driving the increase was a 14.7%yoy
growth in income from Takaful business.
Customer deposits grew at CAGR of 13.0% over the past five
years. In FY12, customer deposits grew 86.2%yoy to RM32.4b. For
1HFY13, current and savings deposits (CASA) grew 6.2%yoy. The
Group’s CASA ratio of 36.5% as at end 1HFY13 was higher than the
industry’s CASA ratio of 26.6% (as at end May’13).
Bank Islam (BIMB) the main revenue and profit driver for BHB.
For the past three financial years (FY10-FY12), BIMB has consistently
contributed at least 80.0% of BHB’s PBZT (Refer Figure 1). For
1HFY13, BIMB contributed 79.1% of BHB’s revenue and 80.2% of
BHB’s PBZT.
Meanwhile, Takaful Malaysia, BHB’s 60.96% owned subsidiary
contributed around mid-teen percentages to BHB’s PBZT for the past
three financials (FY10-FY12). In 1HFY13, Takaful Malaysia’s
contribution to BHB’s PBZT was higher at 20.5%.
RETURN STATS
Price (27 Sept ‘13) RM4.68
Target Price RM4.40
Expected Share Price Return -6.0%
Expected Dividend Yield +3.1%
Expected Total Return -2.9%
STOCK INFO
KLCI 1,776.16
Bursa / Bloomberg 5073 /
BIMB MK
Board / Sector Main/ Finance
Syariah Compliant Yes
Issued shares (mil) 1,066.8m
Par Value (RM) 1.00
Market cap (RM’m) 4,992.6
Price over NA 2.4x
52-wk price Range RM2.80-RM5.03
Beta (against KLCI) 1.14
3-mth Avg Daily Vol 0.88m
3-mth Avg Daily Value RM3.87m
Major Shareholders
Lembaga Tambung Haji 51.17%
EPF 9.72%
Yayasan Pelaburan PP 5.42%
MIDF EQUITY BEAT Monday, 30 September 2013
2
Table 1: Investment Statistics
*Financial year end has been changed from June to Dec in 2010.There were 18 months in FY10 compared to 12 months in FY11 Source: Company, MIDFR
In terms of business segment, Takaful Malaysia has been the 2nd largest contributor to BHB’s revenue and profit.
BIMB the 3rd
largest local Islamic Bank by assets. In comparison to other local Islamic Banks, BIMB is the 3rd largest
by assets with an asset size of RM40.1b. BIMB’s asset size translates into a market share of circa 10% of Islamic
Banking system’s total assets as at end Jun’13. Maybank Islamic and CIMB Islamic Bank ranked 1st and 2
nd among local
Islamic Banks in terms of assets with asset sizes of RM106.8b and RM60.5b respectively. In terms of loan size, BIMB
ranked 5th among local Islamic Banks with loan base of RM21.4b.
Figure 1: Islamic Banks total assets (RM’Bil) Figure 2: Islamic Banks loan base (RM’Bil)
Source: Company Source: Company
Consumer loans contributed a substantial portion of its total financing. Consumer financing contributed 74.6% of
BIMB’s total loans.
Figure 3: BIMB’s net financing growth (%) Figure 4: Loan portfolio breakdown by customers (%)
FYE 31 Dec (RM’Mil) FY11 FY12 FY13E FY14F
Net income from investment of depositors’ funds 920.8 1,060.0 1,174.7 1,355.6
Income from investment of shareholders’ funds 685.1 823.3 902.9 968.6
Net income 1,577.4 1,852.2 2,045.0 2,290.1
Profit before zakat and tax (PBZT) 588.9 717.4 802.1 819.9
Profit after zakat and tax (PAZT) 422.4 497.6 593.6 606.7
Profit after zakat, tax and MI (PAZTMI) 212.1 252.3 302.7 547.3