COMMENTS ON AFFIN BANK BERHAD (5185)

FIGURE 1: AFFIN 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. Affin Bank is one of the major banks in Malaysia. Affin Bank's last five years earning per share decreased from 33.3 to 25.9sen. At current share price, P/E ratio is at relatively low level (6.8). Total annual dividend payout was 5sen per share, at current share price dividend yield is around 2.46%, which is lower than fixed deposit rate.

2.       NOTABLE POINTS:

a.       Affin Bank did not perform well compared to other banks in Malaysia, return on equity around 6.36% only, cost-to-income ratio, relatively high at more than 50%. Management should improve efficiency more to match the performance of other major banks in Malaysia. Dividend payout ratio is at around 20%, which is much lower compared to other banks, which pays over 40% of income to shareholders as dividend. Overall, shares investment in Affin Bank are less attractive compared to Maybank, CIMB Bank and Public Bank.

3.       IS THIS COUNTER A STRONG GROWTH STOCK? 

a.       REVENUE RANGE (million): ~1920 million in 2018 annual report, this is a high revenue company.

b.      SHARE PRICE: from 2013-2019, share price on decreasing trend from RM3.90 to around RM2.00.

c.       EARNING PER SHARE (EPS): earning per share in last 5 years were decreasing from 33.3 to 25.9 sen per share.

d.      FUTURE POTENTIAL/PROSPECTS: quite dependable and reliable counter, share price expected to be stable.

e.      CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 139 million, around 0.18% of total assets.

4.       IS THIS A STRONG DIVIDEND STOCK?     

a.       DIVIDEND YIELD: in 2018 report, Affin Bank declared a total dividend payout of 5 sen per share, amounts to dividend yield of 2.46 % based on current share price.

b.      CONSISTENCY: consistent dividend payout, last five years (2014-2018) dividends declared range from 3 to 15 sen per share.

5.       OTHER INDICATORS:

a.       CASH FLOW: cash flow is positive, around RM 6324 million, equivalent to RM 0.32 per share

b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is well supported by institutional investors, there are 22 institutional investors at top 30 major shareholders list, including EPF (6.54%), Amanah Saham Bumiputera (1.08%), Lembaga Tabung Angkatan Tentera (35.51%), Bank of East Asia Limited Hong Kong (23.56%), Boustead Holdings Berhad (20.73), SOCSO (0.09%) and few insurance companies and investment funds.

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