{"id":323448,"date":"2023-05-31T00:01:34","date_gmt":"2023-05-30T16:01:34","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323448"},"modified":"2023-05-31T00:40:50","modified_gmt":"2023-05-30T16:40:50","slug":"stock-in-focus-metrobank-mbt-31-may-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-metrobank-mbt-31-may-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Metrobank (MBT) – 31 May 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>MBT<\/td><\/tr>
Company Name<\/strong><\/td>Metropolitan Bank and Trust Company (Metrobank)<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>31 May 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 71.70<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

In our previous MBT Stock in Focus report, we had stated that we preferred BDO and BPI over MBT due to their superior CASA ratios and stronger returns on equity (ROE) and while this still rings true, we also noticed however that MBT\u2019s current valuations are now too cheap to justify its fundamentals. We therefore think that the stock still has room for further upside.<\/p>\n\n\n\n

While BDO and BPI remain fundamentally sound picks given their strong ROEs and CASA ratios, we would like to highlight MBT due to its cheap P\/B relative to historical levels which fails to reflect the bank\u2019s solid ROE.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

MBT most recently booked an ROE of 13.10% for 1Q 2023, and this would actually be MBT\u2019s highest figure since 1Q 2015 wherein it generated 13.71%. As such, current ROE levels stand head and shoulders above the historical median from the 6-year period prior to the pandemic, with a premium of 3.06ppts. Given this solid performance profitability-wise, we therefore see no reason why the bank\u2019s P\/B multiple should remain subdued relative to its past benchmarks. <\/p>\n\n\n\n

Currently, MBT is trading at only 0.76x relative to its book value which is a steep discount compared to its pre-pandemic median of 1.24x. Given that ROE is one of the primary factors that ought to justify a stock\u2019s P\/B multiple, it is therefore quite clear that the bank\u2019s current valuations are misaligned with its actual tangible fundamentals.<\/p>\n\n\n\n

While one can argue that all of this is based merely on the past, we also note that the future prospects of banks still carry promise despite the pause in rate hikes. The expected cut in the RRR should provide a significant boost to lending volumes, and given that MBT has one of it not the highest CET1 ratios in the industry at 16.8%, it is well positioned to ramp up on loan issuances especially as corporate borrowing regains momentum.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>