Newsroom
10 Jan 2018
The Edge : CIMB IB Research raises target price for AMMB to RM5.40
 
CIMB IB Research raises target price for AMMB to RM5.40
theedgemarkets.com/theedgemarkets.com
January 10, 2018 08:20 am +08 

KUALA LUMPUR (Jan 10): CIMB IB Research has maintained its “Add” rating on AMMB Holdings Bhd at RM4.68 with a higher target price of RM5.40 (from RM5) after AMMB proposed a mutual separation scheme (MSS) for its employees.

In a note Jan 9, the research house said this was not a surprise to it as most other Malaysian banks implemented similar schemes.

It said the MSS would be negative for AMMB’s FY3/18F earnings but the cost savings from this exercise would enhance its net profits from FY3/19F onwards.

“The estimated MSS cost of RM96 million-RM112 million would lower FY18F’s net profit by 5-6%.

“The potential annual cost savings of RM60 million-RM70 million after the MSS implementation would enhance AMMB’s FY19-20F net profits by between 2.7% and 3.4%.

“Retain Add given the attractive valuation and strong rebound in loan growth,” it said.