Maybank and Affin shares rose at midday

Malayan Banking Bhd and Affin Holdings Bhd shares rose at midday, after the lenders recorded a strong financial results for the financial year ended December 31, 2012.

At midday, Maybank shares on Bursa Malaysia rose 10 sen or 1.12 per cent at RM9.03 a piece, with more than 6.5 million shares traded.

Maybank, the country's largest bank by assets, posted a full year net profit of RM5.7 billion, representing a 18 per cent increase. It also surprised the market with a final net dividend per share (DPS) of 28.5 sen.

"This was above our expected final net DPS of 24 sen, based on a 70 per cent payout assumption. The electable portion of the DPS is 24.5 sen," said RHB Research Institute Sdn Bhd in its report today.

RHB Research upgraded its target price on Maybank to RM10.40 from RM10.15 previously.

Meanwhile, Affin shares recorded a 1 sen increase to RM3.26 at the end of the morning session. Its shares were traded as high as RM3.29 during first half, with more than 272,000 shares changed hands.

This was after the company posted a better than expected results, mainly driven by higher than expected other operating income, larger than expected debt recoveries, and strong contributions from its joint-venture entities and associates.

"We maintain our BUY recommendation for Affin with an unchanged target price of RM3.93. Our target price is derived from our Gordon Growth valuation Model but subject to a 15 per cent discount following our downgrade of the banking sector to NEUTRAL since late last year.

"Despite the uncertainties surrounding Affin’s potential acquisition of Bank Muamalat, we continue to see tremendous value in the group. Given the remarkable turnaround of Affin’s operations, current valuation is compelling, trading at a forward P/E of 8.0x and about 32 per cent discount to its FY13 book value estimated at RM4.29," said Alliance Research in its report.