{"id":325122,"date":"2023-09-28T00:04:15","date_gmt":"2023-09-27T16:04:15","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325122"},"modified":"2023-09-28T00:04:18","modified_gmt":"2023-09-27T16:04:18","slug":"stock-in-focus-security-bank-corp-secb-28-sept-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-security-bank-corp-secb-28-sept-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Security Bank Corp. (SECB) – 28 Sept 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>28 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 104.43<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Given the deep undervaluation along with signs of optimism that can be gleaned from its 2nd quarter (Q2) results, SECB\u2019s return on equity (ROE) expansion in succeeding quarters may be primed for a turnaround, and in our view, this
makes current P\/B ratio a bargain. We would recommend a BUY.<\/p>\n\n\n\n

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

Possibility of an off-cycle rate hike<\/h3>\n\n\n\n

As upside risks to inflation continue to heat up, BSP Gov. Remolona mentioned that the central bank was considering a potential off-cycle rate hike. Such a move would hit two birds with one stone, as it allows the BSP to align its policy stance with that of the Fed\u2019s, in case the latter raises its benchmark rate on November 02, while simultaneously also serving to temper the momentum in domestic prices.<\/p>\n\n\n\n

Additionally, another 25bps tightening would also be on the table for the BSP\u2019s own meeting, in the event that inflation data would warrant such an action. To further underline the bank\u2019s hawkish stance, Gov. Remolona also emphasized that it would be too soon to cut policy rates within the first 6 months of 2024, and it would take a significant slow down in growth to prompt the BSP to reverse course.<\/p>\n\n\n\n

Macro environment a potential opportunity for SECB<\/h3>\n\n\n\n

Sentiment on the banking sector has notably dipped the past couple of months, as anticipation regarding an impending rate cut fueled concerns that NIMs and profitability may be peaking soon. With the possibility of around 25 to 50bps worth of hikes looming in the horizon however, this could once again curry favor for the sector. <\/p>\n\n\n\n

In our view, one of the more underrated names who could see a potential bounce back in the coming quarters would be SECB. At 0.43x P\/B, the bank has notably been trading at a steep discount of 1sd relative to its 10-year mean. When looking at the financials, we note that while heavy provisioning remains a risk for the bank, other metrics have displayed significant progression QoQ. <\/p>\n\n\n\n

SECB’s cost-to-income in particular was an area of note in Q2, as the ratio shed 6.5ppts by our estimates relative to Q1. Improving cost management, is likely to supplement the boost in NIMs that may result from gains in CASA ratio (+40bps QoQ) along with the aforementioned rate hikes. <\/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>