{"id":323670,"date":"2023-06-15T00:04:00","date_gmt":"2023-06-14T16:04:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323670"},"modified":"2023-06-14T23:20:15","modified_gmt":"2023-06-14T15:20:15","slug":"stock-in-focus-security-bank-corp-secb-15-june-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-security-bank-corp-secb-15-june-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Security Bank Corp. (SECB) – 15 June 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>SECB<\/td><\/tr>
Company Name<\/strong><\/td>Security Bank Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Sell<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 118.28<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

While upside for SECB is high, Target Price-wise, we would recommend a Sell for now given its subpar asset quality and low Return on Equity (ROE). Investors can then buy back later on if valuations remain attractive and earnings start to recover.<\/p>\n\n\n\n

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

Beginning June 30, the Reserve Requirement Ratio (RRR) for banks will be reduced by 250bps to 9.5%. This decrease is larger than previous expectations of 200bps, which would have taken the RRR down to only 10%. As such, the liquidity boost which this would provide would further stimulate banks\u2019 lending capacity. <\/p>\n\n\n\n

On another note however, the latest data from the BSP also showed that asset quality continued to decline sequentially. While still down year-on-year (YoY), the non-performing loans (NPL) ratio for April showed an uptick of 8bps relative to March, bringing its year-to-date increase to 13bps.<\/p>\n\n\n\n

SECB may feel more pain, as it has one of the highest NPL ratios in the industry. As a result, given the sequential downtrend in asset quality, we believe that SECB could have its profitability compromised from a provisioning standpoint. Some of these effects were already seen in their 1Q 2023 numbers, as provisioning expenses have surged.<\/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>