KUALA LUMPUR (June 28): Shares in Malayan Banking Bhd (Maybank) staged a rebound this morning, after the stock was upgraded with a raised target price on attractive valuations.
The stock opened two sen higher at RM8.70 this morning, before rising to its peak of RM8.90 so far. At 11.40am, the counter pared some of its early gains to trade at RM8.85 — still up 17 sen or 1.96% from yesterday.
A total of 4.13 million shares crossed at the time of writing, valuing the commercial bank at a market capitalisation of RM94.88 billion.
Maybank — the biggest stock on Bursa Malaysia by market value — has seen its market capitalisation dwindle in the past few days, as its share price declined some 5.5% in three days in tandem with the Malaysian stock market negatively affected by foreign outflows. The counter was last seen trading below the RM100 billion market capitalisation in mid-December last year.
The stock received a boost this morning as traders cheered the upgrade, after its recent share price decline led to a buying opportunity.
"We see value emerging for Maybank following the recent drop in its share price, in view of the relatively lower valuations now," said Winson Ng, an analyst with CIMB Research, in a note released yesterday.
"Following the 13.8% drop in share price from an all-time high on May 22, Maybank's one-year rolling forward price-earnings ratio decreased from 14 times at end-April 2018 to a more reasonable level of 12.1 times on June 25. Also, its forward price-to-book value fell from 1.49 times to 1.28 times (below the historical five-year average of 1.32 times) over the same period," Ng explained.
The research firm upgraded the stock from a "Hold" to an "Add", with a revised target price of RM10, from RM9.75 previously.
It said the upgrade was premised also on its swift expansion in insurance income, potential introduction of Islamic shares in Maybank by Permodalan Nasional Bhd, potential listing of Etiqa, as well as an attractive financial year 2019 forecast dividend yield of 6.4%, which is the highest among Malaysian banks and large-cap stocks under coverage.