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Categories
| Maybank IB ups RCE Cap’s target price to 92 sen |
| Business & Market 2009 | |||
| Written by Financial Daily | |||
| Tuesday, 18 August 2009 11:21 | |||
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The research house also forecast that RCE Cap’s three-year net profit CAGR (compound annual growth rate) would remain robust at 16%. “RCE is a good growth stock with experienced management and matching asset-liability maturity profiles. The share price has outperformed YTD (year to date) (+94% vs FBM-KLCI 30’s 36%) but we see further upside as RCE provides exposure to a growing consumer (government employees) loans segment at attractive PER (price-earnings ratio) valuations. “Loan repayments are via compulsory salary deductions, implying low default risk. Foreign shareholding is about 6% now (vs a peak of 15%),” it added. Reiterating its buy call on the stock, the research house expected the company’s loans to remain strong.  “Net loans grew a good 5.1% or RM49 million in 1QFY2010 (Jun 2009 vs March 2009) to RM1 billion. This was supported by new Islamic products. We expect the momentum to stay strong, as appetite for loans is still good. “Aggressive pricing by some domestic banks in the personal loan segment has not affected RCE. Our 20% loan growth forecast for FY2010 implies RM184 million new loans. We retain our 15% per annum loan growth forecast for both FY2011 to 2012,” it said. On the impairment loss on collateralised loan obligation (CLO), Maybank IB said RCE has fully provided for its RM4 million short-term investment in the CapOne CLO programme which had seen several defaults. “It has not provided for any impairment on its investment in the Prima Uno CLO — the subordinated bonds here were downgraded by MARC in May 2009. A worst-case scenario is a RM4 million provision for the full investment value,” it noted. RCE Cap fell four sen to close at 66 sen yesterday. This article appeared in The Edge Financial Daily, August 18, 2009.
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