KHSB(RM0.66)- going private?

Kumpulan Hartanah Selangor Berhad (KHSB)- the Selangor State listed-entity, 57%-held by KPS while KPS is 60.2% held by KDEB. With property-related matters mainly dealt at PKNS level, i believe that having KHSB continue to be listed may be seems as duplication of function, unless S'ngor MB has other plans for the Company.

Current NAV stood at RM1.00.
Trading range from RM0.66-RM0.73.
Support:RM0.66, Resistance:RM0.75

Banking-updates by RHBRI

¨ Industry underlying loan growth continued to accelerate. Mar 08 underlying loan growth accelerated to +10% yoy (Feb 08: +9.8%) after resuming normal service post the festive season and a short month in Feb 08. This was underpinned by both the business and household segments. We are not changing our 2008 loan growth projection of 7% as we expect loan growth to slow down in the latter part of 2008.

¨ Leading loan indicator still robust. The 3-month moving average loan approvals decelerated to +35.6% yoy (Feb 08: +53.7%). Despite the significant higher base in Mar 07 (mainly from the business sector), this is still a robust growth, underpinned by double-digit growth from the household (+39.3% yoy) sector and SMEs (+10.5% yoy).

¨ As expected, average lending rate (ALR) declined to 6.21% (Feb 08: 6.27%). We continue to hold the view that domestic economic activities, consumption and rising loan base will more than offset the pressure on margin.

¨ Asset quality continues to improve while absolute gross NPL reverted back to mom reduction. The Mar 08 three-month gross and net NPL ratios (post-GP8 adjustment) improved by 18bps and 20bps mom to 5.29% and 2.97% (Feb 08: 5.47% and 3.18%), respectively. After snapping an 18-month winning streak in Feb 08 (where absolute gross NPL increased mom), this number reverted back to a mom reduction.

¨ Risks: 1) slower-than-expected loan growth; 2) deterioration in asset quality; and 3) changes in market conditions that may adversely affect investment portfolios.

¨ Forecasts. No changes to our earnings forecasts for the banks.

¨ Investment case. We like the sector for its resilient yet growing earnings, high liquidity and dividend yield (all defensive qualities amidst global uncertainties) as well as good proxy for an expected market recovery in 2H08. Stocks in our universe also have their respective catalyst(s). Our top picks (in order of preference) are Public Bank, Maybank, BCHB, HL Bank and AMMB.