Date of Report: 30 September 2024
Broker: UOB Kay Hian
Company Overview
RHB Bank is one of Malaysia’s leading financial institutions, offering a wide range of banking and financial services to retail, corporate, and institutional customers. The bank is positioned as a key player in Malaysia’s financial sector, with a focus on sustainable growth and improving asset quality.
Stock Information
- Share Price (as of report date): RM6.10
- Target Price: RM6.80
- Upside Potential: +11.5%
- Bloomberg Ticker: RHBBANK MK
- Market Cap: Not specified in the report
Key Highlights
- Upgrade to BUY: The report upgrades RHB Bank’s rating from HOLD to BUY due to a strong pre-provision operating profit trend and improving asset quality.
- Target Price Revision: The target price has been revised upwards to RM6.80 from RM6.39, reflecting a more optimistic outlook.
Financial Performance and Outlook
- Pre-Provision Operating Profit: RHB Bank has demonstrated a strong trend in pre-provision operating profit, contributing to the upgrade in the stock’s rating.
- Improving Asset Quality: RHB Bank’s asset quality has shown improvement, which supports the positive outlook for the bank’s future performance.
Loan Growth and Earnings Outlook
- Loan Growth: The bank’s loan growth remains on track, driven by strong demand in the corporate and retail sectors. This is expected to support earnings growth in the coming quarters.
- Earnings Outlook: RHB Bank is expected to continue benefiting from robust pre-provision profit trends and an improving asset quality outlook, which are likely to drive earnings higher in the near term.
Valuation and Recommendation
- Valuation: The target price of RM6.80 is based on improved earnings potential and asset quality, reflecting a positive shift in investor sentiment toward the stock.
- Recommendation: With the revised target price and positive outlook on asset quality, RHB Bank is now rated as a BUY.
Conclusion
RHB Bank is well-positioned for growth, with improving asset quality and a strong pre-provision profit trend. The bank’s solid performance has resulted in a target price upgrade, making it an attractive buy for investors seeking exposure to Malaysia’s banking sector.
