FIGURE 1: PUBLIC BANK
BERHAD LAST 5 YEAR SHARE PRICE TREND
**analysis
based on 2020 annual report.
1.
GENERAL
INTRO: Public Bank is one of the major banks in Malaysia.
2.
NOTABLE
POINTS:
a. PBB is the third largest bank in Malaysia by
total assets, it has has a wide network of 264 domestic branches and 148
overseas branches, with a combined staff force of over 19,000 people.
b. PBB has the best performance amongst other
domestic banks, whereby in FY2020, it achieved the highest return on equity
(11.2%), lowest cost-to-income ratio (34.6%) and lowest gross impaired loan
ratio (0.4%).
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 20304 million as
reported in 2020 annual report, this is a high revenue company. Between year
2012-2020, the counter’s revenue has been on an overall rising trend. Likewise,
both of the Profit Before Tax (PBT) and Profit After Tax (PAT) are also on a gradual
rising trend.
b. SHARE PRICE: in the last 5 year share price
range between RM15 to RM25. The bonus share issue in early 2021 takes share
price down to around RM 4.
c. EARNING PER SHARE (EPS): earning per share in
last 9 years was overall rising, whereby it ranged from 21.86 to 25.1 sen. PBB
has achieved a very good track record of EPS rising year by year, except for
FY2020, whereby its profits level was affected the COVID-19 pandemic.
d. PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is 16.5, which shows that the share price is reasonable to invest in.
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 373
million, which is around 0.08% of total assets. This shows that the management
is not making a major investment in the future growth and expansion of the
business.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2020 financial year, PBB declared
a dividend payout of 13 sen to its shareholders, which amounts to a dividend
yield of 3.2%.
b. DIVIDEND PAYOUT RATIO: The dividend-to-earnings payout ratio is about 51.8%.
c. CONSISTENCY: This counter’s dividend payout has
been very consistent (dividend paid to shareholders in 5 years out of 5 years)
in the last five years, whereby dividends paid to shareholders ranged from 11.6
to 14.6 sen per share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2020 financial year, PBB
reported a moderate return of shareholders’ equity, at 11.2%.
b. COST-TO-INCOME RATIO: In FY2020, the report
cost-to-income ratio is 34.6%. This shows that the cost of doing business is low,
which is normal in the banking industry.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 831%, whereby its debt level is higher than its equity, resulting
in a potentially unhealthy balance sheet. This gearing ratio is a norm in the
banking industry.
d.
CASH FLOW: cash flow is positive, at around RM 17328
million, equivalent to RM 0.89 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: This counter
is very well supported by institutional investors, there are 24 institutional
investors at top 30 major shareholders list, including EPF (14.78%), KUMPULAN
WANG PERSARAAN (4.08%), SKIM AMANAH SAHAM BUMIPUTERA (1.4%), a few investment
funds, as well as insurance funds and retirement funds. Its major shareholders are
Tan Sri Dato’ Sri Dr. Teh Hong Piow (22.77%) and Consolidated Teh Holdings Sdn
Bhd (13.78%).
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