News Column

AmeSecurities keeps `hold' rating on AFG

February 16, 2014



AMESECURITIES has maintained a "hold" rating on Alliance Financial Group Bhd (AFG) with a lower fair value of RM5.10.

The research house was not impressed with the group's third-quarter earnings, which was 11.7 per cent below forecast and 4.7 per cent below consensus estimates.

"The main area of shortfall from our forecast was the net interest income line, which was again offset by an unexpectedly low loan loss provision expense line. The nine-month numbers made up 66.1 per cent of our estimate and 71.6 per cent of consensus estimates," it said.

Annualised gross loans growth remained strong at 11.5 per cent in the third quarter, which is within the firm's targeted net loans growth of 12 to 13 per cent this year.

AFG's loan growth was mainly from the consumer segment, with car loans being the biggest contributor in the third quarter.

Business loans appeared stagnated, although the group hinted it was mostly due to seasonal drawdown effect during Chinese New Year.

The group has offset the slower growth in the business loan sector with a stronger growth in the newer consumer segment, which indicates AFG's ability to penetrate new areas of lending.


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Source: Business Times (Malaysia)


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