MBSB - In a Different League Now (CIMB)

MBSB has over the years transformed from a mortgage provider into a financial provider of retail and corporate loans. Going forward, the company will focus on its niche segment of providing personal financing to civil servants, introducing more products and providing better customer services. We are initiating coverage on MBSB with a BUY call and a fair value of RM2.35, based on 2.6x FY11 PBV. This valuation is based on a FY11 ROE of 22.8%, COE of 11% and growth rate of 4%.