#Hot stock* MBSB shares up 8.8% on stellar 4Q results

KUALA LUMPUR (Feb 4): Malaysia Building Society Bhd’s (MBSB) shares soared as much as 8.8% today, as the company wrapped up last week by announcing better-than-expected quarterly results and  expanding Islamic banking operations.

At 3:51 pm, the counter was trading 13 sen or 5.75% higher at RM2.39 with 9.6 million shares done. The stock had earlier reached a high of RM2.46 earlier.

The financial services provider reaped RM183.6 million in net profit on revenue of RM487.53 million for its fourth quarter ended December last year (4QFY12), with the whole financial year’s net profit amounting to RM446.65 million and revenue of RM1.83 billion.

Compared with the previous corresponding periods, MBSB made net profit of RM83.83 million on revenue of RM347.14 million in 4QFY11 and net profit of RM325.43 million and revenue of RM1.27 billion in FY11.

In a report today, OSK Research said MBSB’s FY12 core net profit of RM393.7 million, which had excluded the one-off gains of about RM53 million, was “marginally above expectations”. The core net profit accounted for 110% and 106.5% of the research house and consensus’ forecasts, respectively.

OSK retained a “buy” rating on MBSB and raised its fair value to RM3.15 from RM2.81.

“We have excluded some one-off disposal gains totalling RM55.4 million, which we believe included the disposal of an abandoned mall in Johor, a RM4.8 million loss in the disposal of a subsidiary as well as a disposal  gain of foreclosed properties amounting to RM2.2 million. That said, MBSB’s core net profit jumped 22.2% y-o-y, or 37.2%  higher,  while  total net profit including  the  one-off items  would have come in at RM446.7 million,” said the research house.

The fourth quarter of FY12, which was also MBSB’s best performing quarter, saw a RM68.36 million increase in profit before tax (PBT) against the preceding quarter’s PBT of RM177.381 million.

The company’s filing to Bursa said the increase was mainly due to higher income from Islamic banking operations contributed by personal financing portfolio, higher operating income and lower allowance for impairment losses on loans, advances and financing.

These were also partially offset by higher other operating expenses.

MBSB has proposed a final dividend of 9 sen and a special dividend of 18 sen, bringing its total gross dividend per share to 33 sen for a 15% yield, based on today’s reference price of RM2.26.

“The gross loans growth of 50.8% y-o-y exceeded MBSB management's 2012 target of 20% to 25%, but was in line with our forecast for 51%, driven by the strong personal loans segment, which contributed 66.3% of total gross loans. Meanwhile, its loan-to-deposit (LDR) ratio stood steady at 112.9% as deposits grew at a solid 59.1%, but this was still higher than the historical below 110%,” said OSK Research.

Meanwhile, MIDF Research maintained its “neutral” rating on the company, with a higher target price of RM2.50 (from RM2.45).

“Cost-to-income (CTI) for FY12 was 20.5%, slightly lower compared to 21.1% in FY11. We are projecting a higher CTI in FY13 and FY14 at both 26.0% with its investment in new core banking system and its increased number of branches and representative offices,” said the research house.

“The FY12 net profit exceeded our expectations mainly due to a much lower provision for loan losses. However, we leave our forecast of loan loss provision for FY13 unchanged until further clarification from the management on the sustainablity of the low credit cost reported in FY12.”

MIDF also maintained its dividend forecast of 9 sen per share and 9.8 sen per share for FY13 and FY14 respectively, based on MBSB’s minimum payout of 30%.

MIDF Research said it does not expect MBSB to pay a special dividend payment for FY13 and FY14.

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