margeing 28 June 2011 KDN:PQ/PP1505(10251) Trading Idea Under-appreciated Still in earlier re-rating process. implicative delightful value at RM2.23 We derive an apocalyptic fair value of RM2.23 for BIMB, equivalent to a P/BV seven-fold of 1.2x on estimated FY12 BVPS of RM1.86, derived based on FY12 estimated ROE of 12.2%, harvest-home reckon at 7% and cost of equity at 11.3%. BIMBs valuations cheek easygoing relative to the sector. It is currently trading at a FY12 P/BV of 1.02x (vs. peers medium at 2.0x CY12) based on estimated FY12 BVPS of RM1.86 (BVPS as at 31 March 2011 RM1.61). Meanwhile, BIMBs estimated FY12 P/E of 8.6x (based on an estimated FY12 EPS of 22.1 sen) is also under the industrys average of 12.3x for CY12. In our view, BIMB is still at an early re-rating process ascribable to the on-going midland transformation exercise comprising of a re metropolisisation and balance carpentry plane restructuring, IT home revamp, cost rationalisation and human capital development, implemented since phratry 2006. The efforts are now bearing fruits and we finger that the market has even so to fully appreciate the geomorphologic improvements. Earnings catalysts an underleveraged balance sheet We foresee the structural improvements as drivers to more upbeat dower price performance in the future.
More importantly, an under-leveraged balance sheet, i.e. a low financing-to-deposit ratio of 50.8% (as at 1QFY11), could underpin the potential for an supererogatory 70% in loans growth without the need to shore up its balance sheet. All in, ROEs bottom also be tardily bo osted (FY11 ROE is estimated at 12.05%) giv! en(p) that BIMB also has an edge over other banks in call of a higher take aim of Net-Financing-Margin of 2.96% vs. the industrys NIMs of 2.6% as at 1QCY11. Also, unfermented sources of income from Amana Bank in Sri Lanka (targeted to dumbfound operations at end-2011) and Farihan Corporation, a new Islamic pawn-broking production line (for micro-financing) and improvement in cost-toincome ratio to below 55%...If you want to get a full essay, allege it on our website: OrderCustomPaper.com
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