#Hot Stock* Public Bank rebounds, dividend in focus

KUALA LUMPUR (Feb 7): Public Bank Bhd which fell as much as 1% rebounded in tandem with  broader market gains as investors bargain hunted for battered blue-chip stocks following an election jitter-induced sell-off across the Malaysian market yesterday.

At 12.30pm, Public Bank settled at RM15.76 with some two million shares done.The stock which was also in the spotlight for its dividend following the announcement of its full-year results, had earlier declined as much as 14 sen to RM15.58 before rising as high as RM15.88.

In a note today, Alliance Research Sdn Bhd said Public Bank shares had performed well last year and early this year, partly due to investors’ risk aversion, hence, preference for less-volatile stocks amid election uncertainties.

In anticipation that the uncertainties will be cleared by the first half of this year, Alliance expects Public Bank shares to underperform its more-volatile peers post general election.

“Although Public Bank has outperformed since 2012 as investors seek low- beta exposure amid uncertainties, we believe its risk-reward dynamics are less appealing going forward in view of its rich valuation, declining growth and high foreign shareholdings.

“Furthermore, Public Bank may also underperform in the event market sentiment improves, particularly, post 13th GE (general election). As such, we downgrade Public Bank to a sell with an unchanged target price of RM13.62 and advocate investors to sell into strength,” the research firm said.

Public Bank reported a 9% rise in fourth-quarter net profit from a year earlier on higher interest and non-interest income as total as total loans grew. Bottom line was also helped by lower allowance for impaired loans.

Net profit came to RM992.47 million in the quarter ended December 31, 2012 (4QFY12) against RM913.39 million a year earlier while revenue grew by a similar quantum (9%) to RM3.63 billion from RM3.32 billion.

Full-year net profit rose 5% to RM3.87 billion from RM3.68 billion a year earlier as revenue was up 10% to RM14.06 billion from RM12.76 billion.

Public Bank is rewarding shareholders with a single-tier dividend of 30 sen a share in 4QFY12, bringing the year’s total payout to 50 sen a share. This translates into a total payout of 45.3% of its net profit for FY12.

Meanwhile an analyst told theedgemalaysia.com over telephone that the decline in Public Bank shares earlier could be due to shareholders’ disappointment over the group's latest dividend payout which is below market estimates.

He also warned that the stock could be vulnerable to selling pressure when the payout takes place.

“I think the general market is pretty poor today but Public Bank seems to be holding up quite well. But then, since shareholders can expect their dividend in a couple of weeks, we could see more selling pressure after the payout happens,” he said.

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