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Tortie Portfolio: Public Bank Berhad - Part 1
Monday, June 12, 2006

Public Bank Berhad (1295)

Rated the highest among the country’s 10 banks by international rating agency Standard & Poor’s, Public Bank Berhad is well-known for its generous dividend payout and excellent management. For FY2005, the dividend payout was a spectacular RM0.55 per share, which was above analysts’ forecasts. Loans growth of 20% was more than double industry’s growth of 8-9%. NPL (non-performing loans) ratio continued to be the lowest among all the banks (1.8% at 3Q05 and 1.7% at 4Q05; industry’s average was 6%).

For the past 5 years, it was able to maintain double digit growth in revenue, and paying out handsome dividends. But the share price remains stagnant for the following reasons:

  1. 1Q06’s result was ‘within expectation’ (Miss Market is hard to please!)
  2. JCG acquired Asia Commercial Bank for HKD4.5bn cash. Public Bank owns 64% of Hong Kong based JCG Holdings. The price paid for ACB was perceived to be expensive: at 2.5x P/NTA and 43x FY04 earnings. (Hey! Look at the brighter side, its potential growth factor and tapping the fast growing Chinese market. Worst come to worst, ACB is only a mere 6% of PBB’s RM111.6 bn assets. )

At current price of RM6.60, the dividend yield for FY06 will be 6-8% (forecasts ranged from RM0.40 to RM0.55). This alone is better than FD. Fair value estimated at RM7.20 to RM8.00, another potential 8-12% gain. So, relatively low risk potential gain of 14%-20%, an irresistible BUY.











posted by winpulse @ 11:46 AM,

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