KLCI Stock - PBBANK / 1295 - 2010 Quarter 3

Market Cap : 2472348084*12.78 = 31,596,608,513.52 (Very Large)
NTA per share : (12190869-1935506)/3502148 = 2.93
P/BV : 12.78/2.93 = 4.3618
Forecast P/E now : (12.78-0.5)/0.894 = 13.74 (Moderate)
ROE : 22.93% (High)
DY : 0.5/12.78*100 = 3.91% (Low)
Fixed Asset Turnover(3 year) : Not applicable
Liquidity Ratio : Not applicable
Receivables Collection Period : Not applicable
My Target Price : 13.41+0.5 = 13.91 (PE 15, EPS 0.894, DPS 0.5)
My Decision : BUY
My Comment : Revenue and profit increasing, recover slightly from negative cash flow due to net changes in operating assets, navps increasing, major consumer price index still uptrend, total export and import in Malaysia decreasing
Technical Support Price : 12.5
Risk Rating : LOW
OSK Target Price : 14.2 (08 Oct 10)

My notes based on 2010 quarter 3 report (number in '000):-

- The Group's pre-tax profit for the nine months ended 30 September 2010 was 22.1% higher than the previous corresponding period. Net profit attributable to equity holders improved by 19.7%. The improved earnings was mainly due to higher net interest and finance income by 15.3% and higher other operating income by 17.6%, which was mainly due to higher income from the fund management business and higher foreign exchange income. These were partially offset by higher other operating expenses by RM172.2 million which was mainly due to the increase in personnel costs resulting from the expansion of marketing sales force and higher business volume

- The growth in the Group’s net interest and finance income was driven by continued strong loans and core deposits growth coupled with sustained strong asset quality, as well as the impact of the various increases in overnight policy rate during the period. Gross loans had grown by 13.6% year-on-year as at 30 September 2010 as compared to 30 September 2009 mainly arising from financing of small- and medium-sized enterprises (“SMEs”), residential mortgages and financing of passenger vehicles. Total core deposits from customers had also grown by 9.6% as compared to 30 September 2009 which partly contributed to the higher net interest income for the current financial period

- The Group's domestic commercial bank, Public Bank, recorded a 39.4% higher pre-tax profit for the nine months ended 30 September 2010 than the previous corresponding period. This was mainly due to higher net interest income, higher dividend income from subsidiaries and higher foreign exchange gain in respect of the hedging of the Group's overseas operations, partially offset by higher other operating expenses and loan impairment allowances

- Pre-tax profit contribution from the Group's overseas operations increased by 13.6% from the previous corresponding period, mainly due to the lower loan impairment allowance in the current period

- For the 3rd quarter ended 30 September 2010, the Group registered an improvement of 22.8% pre-tax profit as compared to the previous corresponding quarter. This was achieved on the back of strong loans and deposits growth and stable asset quality. Earning attributable to equity holders grew by 22.5% over the same period

- The Group's pre-tax profit for the 3rd quarter ended 30 September 2010 shows an increase of 7.1% as compared to the pre-tax profit of RM982.0 million for the preceding quarter ended 30 June 2010. Net profit attributable to equity holders increased by 6.6% over the same period. The improved performance was mainly attributable to higher net interest and finance income by RM33.1 million and higher other operating income by RM27.4 million

- Estimate next 4Q eps after 2010 Q3 result announced = 0.2235*4 = 0.894, estimate PE on current price 12.78 = 13.74(DPS 0.5)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.2096*4 = 0.8384, estimate highest/lowest PE = 14.69/13.62 (DPS 0.5)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.197*4 = 0.788, estimate highest/lowest PE = 14.87/13.59 (DPS 0.55)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1965*4 = 0.786, estimate highest/lowest PE = 14.64/13.22 (DPS 0.55)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1852*4 = 0.7408, estimate highest/lowest PE = 15.65/13.59 (DPS 0.55)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.177*4 = 0.708, estimate highest/lowest PE = 14.34/13.12 (DPS 0.55)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.1744*4 = 0.6976, estimate highest/lowest PE = 14.19/11.11 (DPS 0.5)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.1949*4 = 0.7796, estimate highest/lowest PE = 11.22/8.34 (DPS 0.5)

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