Market already anticipated a relative good result. Yup, I had the same opinion, even with a good result, mostly will up roughly like that unless got extra special dividend.

Current market facing is the future prospect of the financial stocks. With potential high interest rate in the future, slow growth ahead, and profit margin being squeezed, financial stocks might be vulnerable to higher NPL ahead.

If FD rate is 10%, surely everyone will dump share and flock to FD. That's why KLCI dropped to 300 points because of FD rate of 12%, there is no reason to hold on stocks back to 1997 crisis.

Interest rate always plays a key part why a stock stay at certain level. If FD rate is 10%, a stock with PE of 10x will be seen expensive. While if FD rate is 1%, then a PE of 20x will be seen as cheap. It is always a return reward ratio game in investment world. That's why you see Japanese stocks are having quite high PER (25-30x and above) across the board because of relative low interest rate or should say none at all.

What I see is an ok result but revenue is a bit lightweight which might be a concern, although not big deal.

My opinion only.

Ya, a little bit 'surprise'.

Yes, ex-date don't care when you pay, ex-date care only when the time you purchase.

Actually back old day, (10+ years), Pbbank stock is not as good as now, it somehow a quite stagnant stock with a steady dividend yield. Nothing to shout about. The share price generally going nowhere most of the time, even at the high of 1993 super bull run, its stocks was around 3.xx only (before stock merged and bonus issues), something like every year gave 8% (Par value of Rm0.50) dividend. While TNB was near to Rm20, Telekom also 15.xx while UEM was 20! Proton 1x.xx.

This stock starting to shine when they are giving generous year in year out, after banks have abundant of cash which they find not much way to loan out or expansion locally. By then the stocks starting to creep up higher and higher.
Also, one of the reason why it performs so good this recent years is because BNM let the interest spread widen (BLR-FD interest, the basic of banks making money), which let the banks earn more and more to recoup their capital and profit since 1998 crisis. When 90's the spread was not as much as currently.
Also banks nowadays being allowed by BNM to impose a lot of non-interest income on customers, like charges on ATM cards, penalty charges, UT trust commission etc, which push up the banks profit even higher. Don't look down those small small money, it easily makes a banks earn hundreds of million without much risk.

Good and consistently payout based on improvement in real earning is the basic and solid support for any stock price. So in order for Pbbank to drop back to Rm5, 2 scenario I can think of :

1. Company profit goes down aka EPS, which make the company unable to have generous dividend again.

2. FD interest rate go up to 8%, which 8% yield of Pbbank is not attractive anymore.

Just my 2 cents.

This post has been edited by cherroy: Jul 30 2008, 12:28 PM

Actually there are not many choice that we can have after the big merger, I mean local bank.

If really want to have financial stocks, some overseas hardly beaten financial stocks might be a better choice than locally. Just my opinion though.

My opinion,
In the article, the use of comparison between CIMB and PBBank is a weak point instead a strong point to claim Pbbank is expensive, although I personally also rate Pbbank not cheap at current level, but if share price of CIMB is having the same PER or P/BV with Pbbank, then who is going to buy CIMB or Maybank etc?
In term of NPL ratio, Pbbank excel over CIMB and the rest of banking in Malaysia, in term of management, Pbbank excel over all local bank, best example would be go through 1997 crisis without any aid and losses incurred, in term of dividend, still Pbbank on top over them.

So Pbbank is trading at much more premium over CIMB, Maybank and other local banking stocks has its own reason. Not to mention, others are highly political link and GLCs related issue.

PS: I don't say current price is cheap, nor recommend it is a good stock to buy at current situation. Just stated out the reason of premium price that investors in the market willing to pay.

Besides of NPL issue, the more concern is, it might be more political linked than Maybank. Especially nowadays with lot of uncertainty in political front. My opinion only.

Pbbank will drop in below condition

1. Dividend become lesser with profit shrink (as you need profit to pay consistent dividend), so high dvidend alone is not enough, you need profit to support it.

2. Economy run into recession resulted no loan growth and NPL become higher. Pbbank has the best NPL ratio among the banks locally, but even with tight lending practice, NPL ratio will move according to the economy condition, no one will spare from it if economy is in recession, just degree more and less.

In current bear market, dividend yield is the ultimate support for any stocks.

Touch wood, now sliding liao after talk about it.

It definitely has room for downside. As others become cheaper, it will pressure it to go lower.

Got lah, back Feb 2007, it dropped more than Rm1.00 on that day.

That time around 8.xx.

This post has been edited by cherroy: Oct 10 2008, 03:29 PM

No, it shouldn't be forgotten. It is a valuable lesson.

May be after 5 years, people will change their tone and will say, gosh, I should have buy at that time..

But we have to consider that, both (1997 and 2008) condition is different. 1997 Pbbank and local banking industry was directly hit from the front of the crisis whereby default rate was sky-rocketing all the way, while money was outflown to overseas and economy was in deep recession with GDP -7% or more and RM was depreciating non-stop.

This time, it is global financial crisis, which hit from backyard, and the economy slowdown will affect from the export reduction, but it is not a directly hit from the front, although the damage could be severe as well. But at least RM is shielded from the attack this round. In fact RM is appreciating against major currencies (like GBP, AUD, Euro) except USD and Yen.

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Added on October 27, 2008, 4:46 pmIndeed earning capability is different from last time, it has improved a lot.

Back 1997 crisis, Pbbank was the only one bank that never registered a loss (with severe profit reduction) even during the crisis. Since then, people have given a good view/credit on this stock on their management side, that's why it ables to surge more than Rm10 because people willing to pay a premium over the good management.

This post has been edited by cherroy: Oct 27 2008, 04:46 PM

Totally irrelevant, as whether previos it was 3.00 or 30.00 or 300.00 means nothing for now and future.

Transmile was RM 15.00, now 0.6x
UEM holding was RM 20.00, after restructuing, don't know how much now.
AIG was USD 80, now USD1.63
Yahoo was more than USD 100 during 1999, now less than USD 20

Are they severely cheap as well?

Cheap or not cheap is not because of price. Berkshire Hathaway at USD 100,000 can be considered cheap, but for xyz company at Rm0.05 also will be view bloody expensive.

Cheap definition should be according to company profitability and company valuation, not price.

Yesterday close was USD 111,700.

Don't need to have 1 lots (x1000 or x100), have 10 shares, already enough.

On paper, surely Maybanks is a lot cheaper than PBBank be it in term of book value, PER etc.

Currently, the main problem of Maybank is that investors wary off is that recent expensive acquisition saga.

If company is not looking after the shareholders benefits by buying expensive then investors generally don't view it is a good bet or investment. As for company, you needs just a few doggy decision that already can wipe out the previous years of profit being made.
What normal investors want is company looking after their benefits, as simple as that. Minority shareholders have no protection in term of mis-management of a company. Although Maybank is not reaching the state of mis-management, but the recent expensive acquisition doesn't being looked well at all, as minority shareholders can't object the decision even it will lead to hundred of millions of losses when the acquisition completed.

Maybank being selling at discount got its reason, it is not purely undervalued without any reason.

I don't think Pbbank bought back a lot of their own share.

50/1000 treasuries shares distribution means they had bough 5% of of their outstanding shares which is huge and signficant already. Apart from YTL group company, I don't reckon any company has bought back so many shares, I might be wrong.

Just fyi, share buy back is limit at 10%.

Yes, company management cannot simply want to buyback then can buyback already, they need to seek for shareholders approval first but until now, haven't seen those buyback proposal that being rejected one.

They also need to seek for renewal through shareholders if they want to continue its buyback programme which previous approved but expired and doesn't fully utilise previously.