KUALA LUMPUR (May 8): AffinHwang Capital Research has downgraded Malaysia Building Society Bhd (MBSB) to Sell (from Buy) at RM2.01 with a lower target price of RM1.80 (from RM2.80) and said that subsequent to a weak 1Q15 (net profit down 36.8% year-on-year), MBSB’s management had guided that the earnings outlook will be more challenging ahead, driven by a 2-year impairment programme which will see credit costs spike up to 130-150 basis points.

“Downgrade to Sell (from Buy), with a lower PT of RM1.80 (as we cut 2016E EPS by 35%).

“Our downgrade is premised on: i) management’s lack of transparency; ii) our concern over more retail loans turning NPL-status, hence more provisions; and iii) more consensus earnings and rating downgrade,” it said.