UOBKayhian on 28 Jan 2014
FY13F PE (x): 12.2
FY14F PE (x): 11.5
Bank NISP was established at Bandung in 1941. It became a commercial bank in 1967 and was listed in 1994. Bank NISP was conservatively managed and weathered the Asian Financial Crisis without any government support. OCBC first acquired a 22.5% stake in Bank NISP in 2004. OCBC continued to increase its stake and currently owns 85.1% of OCBC NISP. Bank NISP merged with OCBC Indonesia to form OCBC NISP in 2011.
Expansion in Indonesia aligned to strategic plan. OCBC plans to generate growth overseas and enlarge its franchise in Indonesia and China to overcome slower growth domestically in Singapore as part of its New Horizon III Strategic Plan (2011-15). OCBC NISP has embarked on a 171-for-500 rights issue at Rp1,200 to raise Rp3.5t. The rights proceeds strengthens OCBC NISP’s capital base to support business growth.
Maintain BUY. Our target price of S$12.45 is based on 1.71x 2014F P/B, derived from Gordon Growth Model (ROE: 12.0%, required return: 7.8% and growth: 2.0%).
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