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Investing.com - UBS initiated coverage on AMMB Holdings Bhd (KL:AMM) (OTC:AMMHF) with a Buy rating and a price target of MYR6.40, implying a 23% upside potential.
The investment bank identified AMMB, Malaysia’s sixth-largest domestic bank by assets, as undervalued at its current 0.8x forward price-to-book ratio, which represents a 14% discount to the sector average.
UBS forecasts AMMB’s dividend payout ratio will gradually increase to 60% over the next few years, exceeding the current consensus expectation of 50%, with potential to reach 70% given the bank’s excess capital position.
The firm noted that current valuations do not adequately reflect AMMB’s return on equity outlook, with consensus forward ROE at 9.3% and management’s medium-term ROE target of 11-12%.
UBS’s earnings per share forecasts for AMMB align with the current market consensus, supporting its positive outlook on the Malaysian banking stock.
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