High asset quality and lowest infection ratio coupled with ROE comparable to top tier banks constitute our investment thesis for BAHL
On the back of aggressive branch network expansion, the deposit base of the bank has witnessed a CAGR of 21% in last five years against industry average of 11%. We expect the bank to continue expanding its network at the same pace largely through sub branches
Lowest infection ratio of 2.4% and excess coverage by way of higher than required provisions make the bank stand out in the whole industry
Given investment-heavy asset side of the bank the future course of NIMs will depend upon discount rate scenario. We believe NIMs will average at 4.1% during CY12-15E
With NPL accretion slowing down, expansion through low-cost sub branches and investment-heavy balance sheet, our projection for CY12 earnings stands at PKR5.2/share, up by 15% YoY
With a Justified PB multiple of 1.69x and CY12 book value of PKR20.3/share, our target price for BAHL comes out to be PKR34.4/share, yielding an upside of 21%. With a CY12 dividend yield 12%, the stock offers a total return of 33%. BUY!
No comments:
Post a Comment