Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Based in Malaysia, <a href="https://www.smartkarma.com/entities/27235" target="_blank" data-smartkarma-citation="entities:27235:1">AFFIN Bank Bhd (ABANK MK)</a> is the product of two mergers over the last decade. Today AFFIN is a small-medium-sized financial services group, with 107 branches, combining corporate and SME banking; consumer banking (remittance services, vehicle loans, mortgages, personal loans, credit cards, unit trusts, and bancassurance products); Investment/Merchant Banking via AFFIN Hwang (AHAM), including corporate finance, capital market services and investment management; plus underwriting of general and life insurance (an underpenetrated market) through AAGI and AALI. AFFIN Islamic is a wholly owned subsidiary.The core shareholders are LTAT (the superannuation fund for the Armed Forces), the Bank of East Asia, and Boustead Holdings which limits the float.Malaysia has a tailwind of a new administration, vowing to overturn many aspects of its predecessor – including cancelling mega infra projects and reducing the “real” National debt.The economy is pretty buoyant and is slated to generate an average of 4.75% GDP growth over 2018-2022. Inflation has mellowed, supported by the cut in GST, but will still, once these effects diminish, be modest, at around 2%, this year. The current and trade accounts are in surplus.Malaysia, however, has a high level (by Asian standards) of household (excluding mortgages) indebtedness, dominated by credit cards, auto/vehicle finance, and personal loans. This had led to a moderately high risk in terms of the credit-to-GDP gap. The corporate sector is not excessively leveraged.<div class="content-highlight">AFFIN trades at a P/B ratio of 0.5x and a Mkt Cap./Deposits of 8%, well below the global and EM medians. Earnings Yield lies at 13.3%. The limited float will have a bearing on the valuation. A quintile 1 PH Score™ of 7.9 captures above-average metric change (though not in asset quality and efficiency) and value-quality attributes.  Combining technical momentum, franchise valuation, and the PH Score™, the overall ranking stands in the top decile globally. A RSI of 43  points to potential upside.</div>

Based in Malaysia, AFFIN Bank Bhd (ABANK MK) is the product of two mergers over the last decade. Today AFFIN is a small-medium-sized financial services group, with 107 branches, combining corporate and SME banking; consumer banking (remittance services, vehicle loans, mortgages, personal loans, credit cards, unit trusts, and bancassurance products); Investment/Merchant Banking via AFFIN Hwang (AHAM), including corporate finance, capital market services and investment management; plus underwriting of general and life insurance (an underpenetrated market) through AAGI and AALI. AFFIN Islamic is a wholly owned subsidiary.The core shareholders are LTAT (the superannuation fund for the Armed Forces), the Bank of East Asia, and Boustead Holdings which limits the float.Malaysia has a tailwind of a new administration, vowing to overturn many aspects of its predecessor – including cancelling mega infra projects and reducing the “real” National debt.The economy is pretty buoyant and is slated to generate an average of 4.75% GDP growth over 2018-2022. Inflation has mellowed, supported by the cut in GST, but will still, once these effects diminish, be modest, at around 2%, this year. The current and trade accounts are in surplus.Malaysia, however, has a high level (by Asian standards) of household (excluding mortgages) indebtedness, dominated by credit cards, auto/vehicle finance, and personal loans. This had led to a moderately high risk in terms of the credit-to-GDP gap. The corporate sector is not excessively leveraged.AFFIN trades at a P/B ratio of 0.5x and a Mkt Cap./Deposits of 8%, well below the global and EM medians. Earnings Yield lies at 13.3%. The limited float will have a bearing on the valuation. A quintile 1 PH Score™ of 7.9 captures above-average metric change (though not in asset quality and efficiency) and value-quality attributes.  Combining technical momentum, franchise valuation, and the PH Score™, the overall ranking stands in the top decile globally. A RSI of 43  points to potential upside.

Malaysia

AFFIN Bank Berhad operates as a bank. The Bank offers deposits, loans, investment, online banking, asset management, underwriting, life and general insurance facilities, and financing services. AFFIN Bank serves customers in Malaysia.

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AFFIN Bank Bhd (ABANK MK)

AFFIN Bank: To Affinity and Beyond

Based in Malaysia, AFFIN Bank Bhd (ABANK MK) is the product of two mergers over the last decade. Today AFFIN is a small-medium-sized financial...

Paul Hollingworth

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