KUALA LUMPUR: Affin Hwang Research has kept a Buy call on MBSB with a target price of RM2.75 based on 2016E ROE of 14.2%, 3% growth rate, and 11.2% cost of equity.
In a note on Tuesday, the research house said MBSB is shifting its group direction to stay relevant in the Islamic Financing market, hence, is targeting to increase its corporate loan exposure to 25% from 9.2% currently under its new five-year plan (for 2015-2019).
This means that the group will be diversifying from its traditional PF-i business, where growth has been dampened by regulatory curbs.
"Meanwhile, we believe that MBSB could be an attractive M&A target given its strong corporate relationship with key government institutions," it said.
MBSB’s 2014 net profit beat Affin's and street estimates due to a deferred tax writeback of RM366mil.
Otherwise, PBT has been flat on-year.
"Given constraints in the personal financing space, management is diversifying away from its traditional PF-i business.
"A final dividend of 10 sen and a special dividend of 2 sen have been proposed," it added.
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