20051014 Hwang DBS Daily Focus

Highlights
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> AMMB - 1HFY06 profits may exceed consensus - Buy (Upgrade from Hold)
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> We expect AMMB to report c.RM200m net profit for 1HFY06. On an annualized
> basis, this would exceed consensus forecasts. Given strong industry loan
> approval statistics, we have raised AMMB's FY3/06 loan growth to 8.9%. But
> rising NPL expectations due to increased inflationary pressure and higher
> opex from post-integration marketing costs are expected to impede earnings
> growth. Hence, we have lowered our FY3/06-08 profits by 5% to 6%. As its
> share price had fallen 10% since Aug 05, it now offers a 15% potential
> upside to our price target of RM2.90 (based on 1.7x CY06 BV) and 3.6%
> dividend yield. We upgrade AMMB to Trading Buy.