MBSB rises as much as 6.84% after returning to black in 3Q

KUALA LUMPUR (Dec 1): Malaysia Building Society Bhd (MBSB) rose as much as 6.84% or four sen to 62.5 sen today after the group returned to the black with a net profit of RM258.4 million for the third quarter ended Sept 30, 2020 (3QFY20).

At 11.48am, the stock had pared some gains to settle at 61.5 sen, still up by three sen or 5.13%.

The stock, among the most actively traded stocks this morning, saw RM17.53 million shares traded.

The group announced yesterday that it achieved a net profit of RM258.4 million for 3QFY20, compared to a net loss of RM12.51 million for the preceding quarter, due to a reduction in funding cost. Revenue, however, fell 13.63% to RM765.57 million from RM886.35 million for 2QFY20.

On a year-on-year (y-o-y) basis, the group’s net profit was up 51.76% over the RM170.16 million reported for 3QFY19, while revenue rose 1.86% from RM751.63 million.

For the nine months ended Sept 30, 2020 (9MFY20), the group’s net profit fell 52.12% to RM172.48 million from RM360.21 million a year earlier. Revenue for the period was up 7.43% at RM2.39 billion from RM2.23 billion previously.

AmInvestment Bank Research analyst Kelvin Ong said in a note today that the group’s normalised earnings for 9MFY20 were above expectations, making up 97.9% and 85.9% of the research house's and the consensus FY20 net profit estimates respectively.

“The variance was largely due to lower allowances for loan impairment. We keep our FY20 forecast unchanged as 4QFY20 is likely to see the group book further pre-emptive provisions for the impact of Covid-19,” Ong said.

Meanwhile, the group's 9MFY20 net profit margin expanded by 31 basis points (bps) y-o-y to 3.15% with a decline in cost of funds. Ong said the group had an advantage with its 51.7% financing in fixed rates, which helped to widen its profit margin after the recent consecutive cuts in the overnight policy rate (OPR).

Ong maintained his "buy" call for MBSB, with an unchanged fair value (FV) of 78 sen per share, supported by a return on equity (ROE) of 7.2% estimated for FY21, pegging the stock at a price-to-book value ratio of 0.6 times.

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