Malaysia's Maybank target raised to 15.40 rgt on construction spending

Malaysia's Maybank target raised to 15.40 rgt on construction spending - CIMB
06/07/2007 15:27:00
KUALA LUMPUR (Thomson Financial) - CIMB Research has raised its target price on
Maybank, Malaysia's largest banking group by assets, to 15.40 ringgit from the
previous 15.30, while keeping its "outperform" call on the stock, saying the
bank will be an indirect beneficiary of rising infrastructure spending under the
government's five-year development plan, the Ninth Malaysia Plan.
CIMB banking sector analyst Winson Ng said Maybank will likely see better
prospects for financial year ending June 2008 as the Ninth Malaysia Plan, which
runs through 2010, could lead to higher loan demand.
Although the core financing for projects will be raised from the capital
market, the implementation of these projects will have spillover effects on
smaller players in the construction sector, said Ng.
In addition, the bank's Singapore unit is expected to register double-digit
loan growth in the 2008 fiscal year based on the projected 11 percent growth
rate for Singapore's banking industry.
"Increased business activity to these players will require them to take up
additional financing for capital investment and working capital purposes," he
said.
Maybank has 18.5 percent share of the construction loans market.
Loan growth had been weak for the first nine months to March as Maybank
continued to focus on expanding its non-interest income, said Ng.
Growth momentum is expected to have improved in the fourth quarter to June, but
full-year loan growth will still be sluggish at a projected 3.8 percent for
financial year 2007, he said.
The revised target price has also taken into account higher-than-expected gains
from the bank's disposal of non-performing loans, he said.
Maybank plans to dispose of another two tranches of NPLs worth a total of 3-4
billion ringgit, the analyst said.
At 3.11 pm, Maybank was unchanged at 12.20 ringgit.

Source: Osk Wirenews