Public Bank (Hold)
Consistency
§ 3QFY11 results in line with HLIB and consensus.
§ Loan growth of 13.8% yoy slightly at lower end of Public's target of 14-15% but ahead of our assumption of 12%.
§ Deposits growth was slightly behind at 11%.
§ Sequentially, 3QFY11 earnings boosted by higher recovery.
§ 9MFY11 earnings growth driven by all line items.
§ Overseas operations impacted by forex but still growing.
§ Asset quality continued to improve.
§ Maintain Hold and target price of RM12.88 based on Gordon Growth with ROE of 23.9% and WACC of 10%.
KLCI: Wild swings ahead
§ With the overnight plunge on Dow and negative remark by German's Finance Minister that there will not be a prompt solution to the euro-zone debt crisis, global markets are again susceptible to swift declines.
§ Hence, we continue to advocate risk-averse investors to sell into strength or trim positions on Weekly resistances overbought Stochastic indicator and looming election risk. are 1470 (15-w SMA) and 1489 (38.2% FR) while supports are 1440 (uptrend line), 1422 (61.8% FR) and 1412 (10-d SMA).
Dow: Due for more pullback
§ With the overnight plunge on Dow and more key corporate earnings to be released this week, Wall St will be bracing for more volatility ahead. Major resistance levels are 11600-11800 while crucial supports are 10800-11000 pts.
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