1Q15 review: Earnings beat consensus estimate; Maintain Hold
`
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
1Q15 review: Earnings beat consensus estimate; Maintain Hold
Rating Summary
1Q15 net profit ahead of consensus estimate: Bank AlBilad has reported 1Q15 net profit
Recommendation
Hold
Target price (SAR)
46.0
Upside/ (downside)
5%
of SAR174mn (flat yoy, c.-30% qoq) that has beaten consensus by c.6%. Net income from investing and financing (‘NIIF’) was SAR272mn (+20% yoy and flat qoq) while the estimated
Stock Details
quarterly NIIF Margin (calculated on Average Total Assets) contracted a marginal 3bps (after
Closing price*
contracting 8bps qoq in 4Q14) sequentially to 2.38%. While no further details are disclosed at this stage, it seems that flat yoy net profit despite solid c.20% yoy growth in NIIF and c.20% yoy growth in financing portfolio could be attributed to impairments/losses in its investment
SAR
43.7
Market capitalization
SAR Mn
Shares outstanding
Mn
400
52-Week High
SAR
57.7
52-Week Low
SAR
36.8
book especially when the investment book of SAR1.9bn (c.4% of total assets) is down c.32%
Price chg. (3 months)
yoy and c.27% qoq.
EPS 2015E
Volume growth remains strong while liquidity position sound: Cues on the volume front
Ticker (Reuters/ Bloomberg)
are mostly positive. While AlBilad’s Net Financing Portfolio (NFP) increased 20% YoY in
* as of April 6, 2015
1Q15 (and c.3% qoq), Customer Deposits grew 21% YoY (and c.3% qoq). However, while
Key Shareholding (%)
we highlight that the yoy growth rate of net financing portfolio has somewhat slowed down in
Mohammed Al-Subeaei & Sons Co. Abdullah Ibrahim Al-Subeaei Investment Co. Abdulrahman Saleh Abdulaziz Al Rajhi
the previous 6 months (compared to other quarters in 2014), nevertheless, AlBilad’s volume growth compares favourably to that of the system (Assets: +11%, Loans: +11%, Deposits:
17,480
%
1
SAR
2.5
1140.SE
ALBI AB
18.5% 11.1% 8.9%
+11% yoy, as per SAMA data as of February 2014). AlBilad’s Net Financing/Customer Deposits ratio stood sequentially flat at c.77% as of 1Q15 and indicates that AlBilad has
Valuation
2015e
2016e
sufficient space to grow its financing portfolio. As per SAMA data, the group added 1 new
P/E (x)
17.5
14.0
branch, 5 new ATMs and 127 POS terminals in the first two months of 1Q15.
P/Pre-Provision Profit (x)
13.8
11.2
2.7
2.5
P/B (x)
Valuation looks close to full; trading at a premium to sector; Maintain Hold rating:
Al Bilad
Jan-15
Feb-15
Oct-14
leads us to maintain our Hold rating on the stock with a revised target price of SAR46.0/share
Nov-14
70
Jul-14
AlBilad’s growth profile, we think at the current price, positives are largely priced in which
Aug-14
120
May-14
premium to KSA/GCC peer group (KSA: 1.4x & GCC: 1.4x). All in all, although we like
Jan-14
170
Apr-14
(c.+3%) while AlBilad currently trades at a 2015E P/B of 2.7x which is at a significant
Feb-14
220
Oct-13
beginning of 2015, AlBilad shares are down c.2% vs. KSA Banks index (c.+4%) and TASI
Nov-13
270
Jul-13
aggressive pricing on the financing portfolio remain the key risk for the stock. Since the
Aug-13
320
Jan-13
15.6% as at end 4Q 2014) is supporting its aggressive lending strategy. However, potentially
Apr-13
Stock price movement vs. TASI
May-13
System: 63% as at end 4Q 2014) and adequately capitalized balance sheet (Tier I ratio of
Feb-13
AlBilad’s low cost funding base (demand deposits c.73% of total Customer Deposits vs.
TASI Bank
(from SAR48.0). 1Q15
Cons*
% Dev
4Q14
% qoq
1Q15
% YoY
Net Inc. from Inv. & Financing
272
na
na
269
1%
227
20%
Net Profit
174
164
6%
249
-30%
174
0%
Total Assets
46,313
na
na
45,230
2%
39,011
19%
Net Financing
29,090
na
na
28,355
3%
24,277
20%
Customer Deposits
37,856
na
na
36,724
3%
31,392
21%
SAR mn
Sources: Tadawul, Company and Saudi Fransi Capital, *Bloomberg
Sources: Tadawul and Saudi Fransi Capital analysis
Sector Coverage Dipanjan Ray [email protected] +966-1-12826861 AbdulAziz Jawdat [email protected] +966-11-2826856
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
Recommendation Framework BUY: The analyst recommends a BUY when our fair value estimate is at least 10% higher than the current share price. HOLD: The analyst recommends a HOLD when our fair value estimate ranges within ±10% of the current share price. SELL: The analyst recommends a SELL when our fair value estimate is lower by more than 10% from the current share price.
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
Contacts RESEARCH & ADVISORY DEPARTMENT [email protected]
SAUDI FRANSI CAPITAL Call Centre 800-125-9999 Website www.sfc.sa
SAUDI FRANSI CAPITAL LLC C.R. 1010231217, PO Box 23454, Riyadh 11426, Saudi Arabia, Head Office Riyadh
Authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
Disclaimer This report is prepared by Saudi Fransi Capital (“SFC”), a fully-fledged investment firm providing investment banking, asset management, securities brokerage, research, and custody services. SFC, and its affiliate, might conduct business relationships with the company that is subject of this report and/ or own its security. This report is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. This report is intended for general information purposes only, and may not be reproduced or redistributed to any other person. This report is not intended as an offer or solicitation with respect to the purchase or sale of any security. This report is not intended to take into account any investment suitability needs of the recipient. In particular, this report is not customized to the specific investment objectives, financial situation, risk appetite or other needs of any person who may receive this report. SFC strongly advises every potential investor to seek professional legal, accounting and financial guidance when determining whether an investment in a security is appropriate to his or her needs. Any investment recommendations contained in this report take into account both risk and expected return. To the maximum extent permitted by applicable law and regulation, SFC shall not be liable for any loss that may arise from the use of this report or its contents or otherwise arising in connection therewith. Any financial projections, fair value estimates and statements regarding future prospects contained in this report may not be realized. All opinions and estimates included in this report constitute SFC’s judgment as of the date of production of this report, and are subject to change without notice. Past performance of any investment is not indicative of future results. The value of securities, the income from them, the prices and currencies of securities, can go down as well as up. An investor may get back less than what he or she originally invested. Additionally, fees may apply on investments in securities. Changes in currency rates may have an adverse effect on the value, price or income of a security. No part of this report may be reproduced without the written permission of SFC. Neither this report nor any copy hereof may be distributed in any jurisdiction outside the Kingdom of Saudi Arabia where its distribution may be restricted by law. Persons who receive this report should make themselves aware of, and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Saudi Fransi Capital LLC; C.R. 1010231217, P.O Box 23454, Riyadh 11426, Saudi Arabia, Head Office – Riyadh. Authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
1Q15 review: Earnings beat consensus estimate; Maintain Hold
Rating Summary
1Q15 net profit ahead of consensus estimate: Bank AlBilad has reported 1Q15 net profit
Recommendation
Hold
Target price (SAR)
46.0
Upside/ (downside)
5%
of SAR174mn (flat yoy, c.-30% qoq) that has beaten consensus by c.6%. Net income from investing and financing (‘NIIF’) was SAR272mn (+20% yoy and flat qoq) while the estimated
Stock Details
quarterly NIIF Margin (calculated on Average Total Assets) contracted a marginal 3bps (after
Closing price*
contracting 8bps qoq in 4Q14) sequentially to 2.38%. While no further details are disclosed at this stage, it seems that flat yoy net profit despite solid c.20% yoy growth in NIIF and c.20% yoy growth in financing portfolio could be attributed to impairments/losses in its investment
SAR
43.7
Market capitalization
SAR Mn
Shares outstanding
Mn
400
52-Week High
SAR
57.7
52-Week Low
SAR
36.8
book especially when the investment book of SAR1.9bn (c.4% of total assets) is down c.32%
Price chg. (3 months)
yoy and c.27% qoq.
EPS 2015E
Volume growth remains strong while liquidity position sound: Cues on the volume front
Ticker (Reuters/ Bloomberg)
are mostly positive. While AlBilad’s Net Financing Portfolio (NFP) increased 20% YoY in
* as of April 6, 2015
1Q15 (and c.3% qoq), Customer Deposits grew 21% YoY (and c.3% qoq). However, while
Key Shareholding (%)
we highlight that the yoy growth rate of net financing portfolio has somewhat slowed down in
Mohammed Al-Subeaei & Sons Co. Abdullah Ibrahim Al-Subeaei Investment Co. Abdulrahman Saleh Abdulaziz Al Rajhi
the previous 6 months (compared to other quarters in 2014), nevertheless, AlBilad’s volume growth compares favourably to that of the system (Assets: +11%, Loans: +11%, Deposits:
17,480
%
1
SAR
2.5
1140.SE
ALBI AB
18.5% 11.1% 8.9%
+11% yoy, as per SAMA data as of February 2014). AlBilad’s Net Financing/Customer Deposits ratio stood sequentially flat at c.77% as of 1Q15 and indicates that AlBilad has
Valuation
2015e
2016e
sufficient space to grow its financing portfolio. As per SAMA data, the group added 1 new
P/E (x)
17.5
14.0
branch, 5 new ATMs and 127 POS terminals in the first two months of 1Q15.
P/Pre-Provision Profit (x)
13.8
11.2
2.7
2.5
P/B (x)
Valuation looks close to full; trading at a premium to sector; Maintain Hold rating:
Al Bilad
Jan-15
Feb-15
Oct-14
leads us to maintain our Hold rating on the stock with a revised target price of SAR46.0/share
Nov-14
70
Jul-14
AlBilad’s growth profile, we think at the current price, positives are largely priced in which
Aug-14
120
May-14
premium to KSA/GCC peer group (KSA: 1.4x & GCC: 1.4x). All in all, although we like
Jan-14
170
Apr-14
(c.+3%) while AlBilad currently trades at a 2015E P/B of 2.7x which is at a significant
Feb-14
220
Oct-13
beginning of 2015, AlBilad shares are down c.2% vs. KSA Banks index (c.+4%) and TASI
Nov-13
270
Jul-13
aggressive pricing on the financing portfolio remain the key risk for the stock. Since the
Aug-13
320
Jan-13
15.6% as at end 4Q 2014) is supporting its aggressive lending strategy. However, potentially
Apr-13
Stock price movement vs. TASI
May-13
System: 63% as at end 4Q 2014) and adequately capitalized balance sheet (Tier I ratio of
Feb-13
AlBilad’s low cost funding base (demand deposits c.73% of total Customer Deposits vs.
TASI Bank
(from SAR48.0). 1Q15
Cons*
% Dev
4Q14
% qoq
1Q15
% YoY
Net Inc. from Inv. & Financing
272
na
na
269
1%
227
20%
Net Profit
174
164
6%
249
-30%
174
0%
Total Assets
46,313
na
na
45,230
2%
39,011
19%
Net Financing
29,090
na
na
28,355
3%
24,277
20%
Customer Deposits
37,856
na
na
36,724
3%
31,392
21%
SAR mn
Sources: Tadawul, Company and Saudi Fransi Capital, *Bloomberg
Sources: Tadawul and Saudi Fransi Capital analysis
Sector Coverage Dipanjan Ray [email protected] +966-1-12826861 AbdulAziz Jawdat [email protected] +966-11-2826856
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
Recommendation Framework BUY: The analyst recommends a BUY when our fair value estimate is at least 10% higher than the current share price. HOLD: The analyst recommends a HOLD when our fair value estimate ranges within ±10% of the current share price. SELL: The analyst recommends a SELL when our fair value estimate is lower by more than 10% from the current share price.
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
Contacts RESEARCH & ADVISORY DEPARTMENT [email protected]
SAUDI FRANSI CAPITAL Call Centre 800-125-9999 Website www.sfc.sa
SAUDI FRANSI CAPITAL LLC C.R. 1010231217, PO Box 23454, Riyadh 11426, Saudi Arabia, Head Office Riyadh
Authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
Bank AlBilad Banks | 1Q 2015 Preliminary Results | April 7, 2015
Disclaimer This report is prepared by Saudi Fransi Capital (“SFC”), a fully-fledged investment firm providing investment banking, asset management, securities brokerage, research, and custody services. SFC, and its affiliate, might conduct business relationships with the company that is subject of this report and/ or own its security. This report is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. This report is intended for general information purposes only, and may not be reproduced or redistributed to any other person. This report is not intended as an offer or solicitation with respect to the purchase or sale of any security. This report is not intended to take into account any investment suitability needs of the recipient. In particular, this report is not customized to the specific investment objectives, financial situation, risk appetite or other needs of any person who may receive this report. SFC strongly advises every potential investor to seek professional legal, accounting and financial guidance when determining whether an investment in a security is appropriate to his or her needs. Any investment recommendations contained in this report take into account both risk and expected return. To the maximum extent permitted by applicable law and regulation, SFC shall not be liable for any loss that may arise from the use of this report or its contents or otherwise arising in connection therewith. Any financial projections, fair value estimates and statements regarding future prospects contained in this report may not be realized. All opinions and estimates included in this report constitute SFC’s judgment as of the date of production of this report, and are subject to change without notice. Past performance of any investment is not indicative of future results. The value of securities, the income from them, the prices and currencies of securities, can go down as well as up. An investor may get back less than what he or she originally invested. Additionally, fees may apply on investments in securities. Changes in currency rates may have an adverse effect on the value, price or income of a security. No part of this report may be reproduced without the written permission of SFC. Neither this report nor any copy hereof may be distributed in any jurisdiction outside the Kingdom of Saudi Arabia where its distribution may be restricted by law. Persons who receive this report should make themselves aware of, and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Saudi Fransi Capital LLC; C.R. 1010231217, P.O Box 23454, Riyadh 11426, Saudi Arabia, Head Office – Riyadh. Authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
CONFIDENTIAL
Refer to important terms of use, disclaimers and disclosures on back page
Saudi Fransi Capital is authorized and regulated by the Capital Market Authority (CMA) License No. (11153-37)
