FIGURE 1: PUBLIC BANK BERHAD
LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2018 annual report.
1.
GENERAL INTRO: This counter core business is on various
banking services. Public Bank is one of the major banks in Malaysia. Public
Bank had good performance in last five years, earning per share increased
steadily from 123.7 to 144.4sen. Company management is good, with return on
equity 14.8% and cost to income ratio 33%. With recent dip in the share price,
now may be a good time to invest in this counter when P/E ratio still at
relatively low level (13.59). Overtime, share price may rebound making it too
expensive. Although total annual dividend payout of 70sen per share is quite
high, at current share price dividend yield is around 3.62% only, not too
attractive to invest for the purpose of dividend return. Could be worthy to
invest looking forward to future appreciation of share price.
2.
NOTABLE POINTS:
a.
In the 2018 report, Public Bank claim to be 3rd
largest bank in Malaysia, serving about 10 million customers. It is the second
largest company on Bursa Malaysia by market capitalisation, return on equity
14.8%, lowest cost to income ratio among Malaysia banks (33%), whereas industry
average is around 44.8% . Also, it has efficient work force that created
"pre-tax profit per employee" of RM379,000/employee, whereas industry
average is lower at RM305,000/employee.
b.
Have good management and caring of well-being of
staff, the Group has a staff force of over 18,000, and about half of them have
been serving the group for over 15 years. These capable staff are valuable
asset of the company.
c.
In 2018, the appreciation of share price
together with the dividend received by shareholder translated into a combined
return of 22.3% for the year.
3.
IS THIS COUNTER A STRONG GROWTH STOCK?
a.
REVENUE RANGE (million): ~22041 million in 2018
annual report, this is a high revenue company.
b.
SHARE PRICE: from 2013-2018, share price trend
inreasing from RM14 to RM25, in 2019 dropped to RM19
c.
EARNING PER SHARE (EPS): earning per share in
last 5 years were on increasing trend, EPS were increasing from 123.7 to 144.4
sen per share.
d.
FUTURE POTENTIAL/PROSPECTS: very dependable and
reliable counter, share price expected to be stable and increasing.
e.
CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets is RM 241 million, around 0.06% of total assets.
4.
IS THIS A STRONG DIVIDEND STOCK?
a.
DIVIDEND YIELD: in 2018 report, Public Bank declared
a total dividend payout of 69 sen per share, amounts to dividend yield of 3.62
% based on current share price.
b.
CONSISTENCY: consistent dividend payout, last
five years (2014-2018) dividends declared range from 54 to 69 sen per share.
5.
OTHER INDICATORS:
a.
CASH FLOW: cash flow is positive, around RM 13319
million, equivalent to RM 3.43 per share
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is well supported by institutional investors, there are 29 institutional
investors at top 30 major shareholders list, including EPF (10.81%), Amanah
Saham Malaysia (1.12%), Kumpulan Wang Persaraan (3.13%) and few insurance
companies and investment funds.
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