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Company Update – Alliance Financial Group (ADD, maintain) - Proxy to the niche growth sectors




Affin Hwang Investment Bank Bhd


10 Oct 2012





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Maintain ADD. Price Target tweaked up to RM4.43 from RM4.33 We reiterate our ADD rating and tweak up our price target (PT) from RM4.33 to RM4.43, equivalent to a P/BV of 1.6x based on CY13 ROE of 13.0%. Despite the 6.3% ytd gain in share price, we continue to see further re-rating considering the: i) upside in dividend payout from the current 40% (14 sen) to 50% (17 sen); and ii) ROE upside from the current 13.2% (as at 1QFY03/13) nearer to industry average of around 14-16% as a result of AFG’s ongoing efforts to boost non-interest income contribution. The slight upgrade in our PT was due to a 6.1% upgrade in FY03/13’s earnings forecasts given a reversal in credit charge and higher expectations of noninterest income generation.

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