#2 Public Bank
Deemed one of the most efficient bank in Malaysia, Public Bank (PB) is currently the second biggest bank in Malaysia after MB. It operates mainly in Malaysia but also has businesses in Hong Kong, China, Cambodia, Vietnam, Laos and Sri Lanka.
Public Bankmainly operates in the retail (consumer and business) banking segment, comprising of 46.1% of its revenue, followed by hire purchase (12.8%), and corporate lending (7.6%).
Public Bank's 3Q 2022 have been particularly fruitful, with revenue and profits growing by 13.1% and 16.2% respectively. Remember the point on most efficient bank? Public Bank's profit margin stood at a whopping 31.0%.
Hence, Public Bank currently has an
OVERPERFORM investment call with a target price of RM4.82. This implies an upside of 14.5%.
Public Bank might be worth taking a look at for the following factors:
- Very high profit margins of about 30%.
- Recession-proof, as PB did not make any losses during the pandemic.
- Steady dividend yield of 3.0% to 4.5%.
In 2022, Public Bank's share price rose by 3.8%to RM4.32, higher than December 2019's price level of RM3.89. Currently, Public Bank is trading at a price-to-earnings ratio of 14.2 times, the highest in the banking sector.
#3 Hong Leong Bank
Hong Leong Bank (HLB) is part of the banking arm of Hong Leong Group, and has operations in Malaysia, Singapore, Hong Kong, Vietnam, Cambodia, and China.
HLB's biggest business is personal financial services (consumer), comprising about 52.1% of total revenue. This is followed by global markets (22.2%) and business & corporate banking (19.8%).
In line with the other Malaysian banks, HLB's financial performance was boosted by the higher interest rates. Revenue grew by 8.7% and 12.8% in 2Q 2022 and 3Q 2022 respectively, while profits rose by 31.6% and 14.3% over the same period.
Currently, HLB has an
OUTPERFORM investment call with a target price of RM23.24. This implies an upside of about 13.5%.
There are a couple of factors that could make holding HLB worthwhile:
- Part of the larger Hong Leong Group which has other businesses that could leverage on HLB's financing capabilities.
- Exceptionally high profit margins of around 45.0%.
HLB rose by 10.4% to RM20.56 in 2022, breaching the level of RM17.30 before the pandemic. It is trading at a price-to-earnings ratio of 12.5 times which is higher than the sector average of 8.5 times.
#4 CIMB Bank
CIMB Bank (CIMB) is headquartered in Malaysia but has operations in a wide variety of countries which includes Singapore, Indonesia, Hong Kong, Thailand, China, U.K., U.S., Myanmar, Vietnam, Bahrain and Cambodia.
CIMB enjoyed a relatively strong performance also in 3Q 2022, with revenue growing by 16.8% while it rebounded to a profit of RM1.4 billion from a loss of RM75.2 million.
At the current juncture, most analysts have CIMB at an
OVERWEIGHT investment call and a target price of 12.8%. This implies an upside of about 12.8%.
CIMB could be worth taking a look at for the following reasons:
- High profit margins of about 20%.
- Exposure to higher risk and potentially revenue-generating countries such as Myanmar, Vietnam and Cambodia.
- High dividend yield between 3.0% to 7.8%.
For the year 2022, CIMB's share price rose by 6.4% while it is currently trading at a price-to-earnings ratio of 12.3 times.