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hi Edward, yes it is. But it was a change in the fundamentals that led to the selling of its share previously. hence, I am using Fibonacci Retracement to determine an estimate of where the rebound should be. Typically a technical rebound will bring it to the 61.8% level which is at 23.10. hope it helps.
Thanks Cheng, I tried Googled but need time to digest haha. I found that you used fundamental and technical to complement each other. You using any tools for analysis?
you are welcome, Edward. I am using dcf with margin of safety and ddm for valuations. banking stocks is a different beast as it focuses on net interest margin (NIM) - delta between net interest income and non interest income. complemented with technical analysis using charting - chartnexus and tradingview. the beauty of trading view is that it allows overlay of charts. there are several techniques when it comes to identifying support and resistance within the technical analysis scope.
historically, pbbank revenue split between interest income and non interest income is approx. 70:30. last 3 years non interest income has been flat. with the opr reduction, the interest income will be affected. the bank will definitely work hard to increase the loans to offset the rates but there is also risk of slowing economy.
we have seen the bank negara lower range of gdp forecast at 4.30 to 4.80% in 2019 while world bank forecast of global economy gdp at approx 3.0. in fact, Q1 gdp was at 4.5% and within the bank negara's forecast.
current p/b for public bank is approx 2.2; highest among the big banks (by market cap) in Malaysia. it's book value per share or also known as NTA is approx 10.55. I am hoping to initiate position at 1.9 p/b. hence, 1.9*10.55 = 20.05
price is still holding on which is good. May loans data from Bank Negara showing slower loans growth from business segment but higher growth in wholesale, retail trade and mfg segment. hopefully better data in June. higher loans growth needed to offset the impact of the opr.
hi jyumi, I am not sure about rhb as I didn't analyze it. but maybank dividend is good. in terms of it's price, I believed it will not sell very far from its book value of approx $7.0. the p/b will not sell way above 1.5x of its book value current p/b is approx 1.3x. this is understood as Maybank's ROA has been in the range of 1.0% for the last 5 years. The day where its ROA started improving and marching towards the range of 1.2 to 1.4%, that's the day where it is possible for p/b to go >1.5
average dividend for the last 5 years is approx 0.51 cents, and at 1.5x p/b, the high end price of Maybank would be $10.5. based on the assumptions, the intrinsic value by ddm would be $8.40. current price is close to its intrinsic value.
the efficiency is pretty good though it has approx 45k employees. non interest income percentage over its revenue has been consistently above 50% which will help to cushion the impact of NIM from lower opr. pbbank non interest income was at 30% on the other hand. hence, imo - Maybank is good for its dividend. these are just my opinions and hope it helps with your research.
would suggest to watch the outcome of MPC meeting tmr. dovish or hawkish statement plus any hints of changes to OPR. followed by month end bank negara bulletin which includes loans approval growth rates.
hi Edward, yes it is. I managed to start a small position of 10 lots at 20.02. it will be a long term investment, hence, will use dollar cost averaging to continue buying it at 6 to 8 months interval. near term, financial sectors is stabilizing despite slower loan growth reported in July - share price priced in. if local and global outlook turns bearish, I am looking forward to add at 18.50 and 16.40.
Great. But need to have strong holding power. A few banks are expecting the OPR to drop further in near future. If OPR really reduced it might affect banks's profit
That's true, Edward. however it will be normalized as financial performance based on new ops rates becomes the new baseline for comparisons - qoq, yoy. I doubt opr will be revised down every qr for the next 12 months. As for the trade war, it maybe long but I don't think Trump wanted to have recessions during his tenure as republican president cemented in history. imo - I think it's a good opportunity for me personally to start a position for one of the most efficient bank in msia.
