KUALA LUMPUR (May 19): Maybank Investment Bank Bhd has upgraded its call on BIMB Holdings Bhd to “buy” from “hold” with a higher target price (TP) of RM4.70 (previously RM4.40), as the research house sees higher value in its 60%-owned Syarikat Takaful Malaysia Bhd (STMB).

In a note today, the research house upgraded its fair value on STMB to RM17.80, from RM8.95, as the stock has an attractive dividend yield of 5%, based on its current share price of RM16.06 and the dividend of 80 sen per share declared in FY14.

“The payout ratio then was a high 88% but management believes that this is sustainable, given STMB’s adequate capital position,” said Maybank.

Besides that, STMB has strong growth prospects for the current financial year, with the management looking at a gross contribution of 15% to 20% for 2015.

“Moreover, STMB is one of only two Shariah compliant financial stocks listed on Bursa Securities, the other being BIMB itself, so there is some scarcity value,” the research house said.

Meanwhile, the research house lowered its target 2015 price-book value for Bank Islam to 1.7 times from 1.8 times, reflecting the de-rating in valuations for the banking sector.

“All in, our sum-of-parts (SOP) for BIMB is raised to RM4.70 from RM4.40 and with prevailing dividend yields of about 4% at the group level to provide the support, we upgrade BIMB to ‘buy’ from ‘hold’,” it said.

At 10.31am, BIMB was unchanged at RM3.90, with a market capitalisation of RM6.02 billion.