KUALA LUMPUR (Dec 14): Banking stocks continue to dominate the list of top gainers, as investors switched to recovery plays following the Covid-19 vaccine rollout.
At noon break, Public Bank Bhd rose 66 sen or 3.01% to RM22.56, making it the second top gainer. This was followed by Hong Leong Bank Bhd, which gained 62 sen or 3.26% to RM19.62.
CIMB Group Holdings Bhd, which was also among the top gainers this morning, climbed 26 sen or 5.84% to RM4.71.
TA Securities’ analyst Li Hsia Wong said in a report today the firm had an "overweight" call on the banking sector underpinned by a more positive outlook in domestic economic activities, some uplift in net interest margin on the back of the gradual unwinding of modification loss and more stable interest rates environment, concerted stimulus measures by governments globally to protect businesses and individuals from economic disruptions caused by the Covid-19 pandemic, and potential reopening of borders as countries look into a mass vaccine rollout.
“Despite uncertainties in terms of the credit outlook, especially post the loan moratorium, we believe that the continued repayment and debt rehabilitation support for targeted borrowers should help address earlier concerns over the broader impact from a potential cliff effect,” said Li.
Coming from a low base, Li forecast banking sector profit growth of 17.7% and 18% in 2021 and 2022 respectively.
“We expect the sector to register a 27.7% year-on-year decline in 2020 net profit. With that, we lower our market risk premium assumption to 5.5% from 6.5%,” said Li.
Li has "buy" calls on Malayan Banking Bhd (target price: RM10.80), Public Bank (TP: RM25.10), CIMB (TP: RM5.10), Hong Leong Bank (TP: RM23), RHB Bank Bhd (TP: RM7), AMMB Holdings Bhd (TP: RM4.50), Alliance Bank Malaysia Bhd (TP: RM3.70) and Affin Bank Bhd (TP: RM2.50).