BIMB has just broken above its 2013 high of RM4.29 and traded at a high of RM4.43 around 10:45am. If this upside breakout can sustain, BIMB could continue its prior uptrend. Based on a 1-to-1 extension, the potential target for a successful rally is RM5.00.
Chart 1: BIMB's weekly chart as at Feb 10, 2017_10.56 (Source: MalaysiaStock.Biz)
Its warrant, BIMB-WA has however showed no sign of any impending upside move. Trading at a premium of 17%, BIMB-WA has an exercise price of RM4.72 & expiry date of Dec 4, 2023. If BIMB can continue its prior uptrend, BIMB-WA would be a very good bet.
Chart 2: BIMB-WA's daily chart as at Feb 10, 2017_10.48 (Source: MalaysiaStock.Biz)
Recent News Flow
Today, the Sundaily published an extract bullish report on BIMB from HLIB Research (here). HLIB initiated a BUY call for BIMB with a target price of RM5.00. HLIB highlighted the strength of BIMB as follows:
- It consistently delivers top-tier ROE in the industry with an average of 11%, post-Bank Islam stake acquisition. In comparison, only two other banks – Public Bank Bhd and Alliance Financial Group – managed to maintain a double-digit ROE.
- It has high current accounts and saving accounts (CASA) ratios of 37% to 47%, higher than the industry average of 25%, which benefit mainly government bodies and agencies and religious associations.
- It has good asset quality, with gross impaired financing improved from a high of 22% in FY05 to FY06 to 1.1% in FY15.
- It is the only syariah-compliant full-fledged bank listed on Bursa Malaysia, riding on the under-served and rising Islamic finance awareness in Malaysia.
Recent Financial Results
In the last quarter (QE30/9/2016), BIMB's net profit dropped 2% q-o-q but rose 17% y-o-y to RM141 million while revenue rose 5% q-o-q or 10% y-o-y to RM881 million.
Table: BIMB's last 8 quarters' P&L
Graph: BIMB's last 18 quarters' P&L
BIMB (closed at RM4.28 on Feb 8) is now trading at a PER of 11.6x (based on last 4 quarters' EPS of 37 sen). I believe this is a fair PER.
Based on tentative technical breakout, satisfactory financial performance and fair valuation, I reiterate my BUY call for BIMB. The alternative is to get into its warrant, BIMB-WA, which may present a better reward-to-risk proposition. Good luck!