{"id":331808,"date":"2025-03-07T00:29:59","date_gmt":"2025-03-06T16:29:59","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=331808"},"modified":"2025-03-07T00:30:04","modified_gmt":"2025-03-06T16:30:04","slug":"stock-in-focus-security-bank-corp-secb-7-march-2025-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-security-bank-corp-secb-7-march-2025-by-ap-securities\/","title":{"rendered":"Stock in Focus: Security Bank Corp. (SECB) – 7 March 2025 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>7 March 2025<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 113.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We reiterate our BUY rating for SECB as the company managed to deliver decent earnings coupled with expectations that further pick-up in consumer demand would fuel their retail loan segment\u2019s growth. Additionally, we also see the BSP\u2019s recent 200 bps reserve requirement rario (RRR) cut, which will take effect by end of March, would also help push the bank\u2019s earnings to higher levels. As such, we see the stock as a value play especially at current heavily undervalued levels with consensus Target Price of P113.00 translating to an upside of 59.6% based on its last traded price.<\/p>\n\n\n\n

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

Earnings in line with estimates<\/strong><\/p>\n\n\n\n

SECB posted earnings of P11.2-Billion for 2024, up 23.4% year-on-year (YoY) and in-line with estimates of P11.3-Billion on the back of all around growth with Net Interest Income rising by 26% YoY and Non-interest income posting even faster growth of 36% YoY. Furthermore, service charges, fees and commissions also grew by a staggering 47% attributable to increase in fees from bancassurance, credit cards, and loans. Lastly, the bank\u2019s NIMs expanded by 24bps on a YoY basis to end up at 4.73% for 2024.<\/p>\n\n\n\n

More room for improvement<\/strong><\/p>\n\n\n\n

SECB\u2019s has managed to push their NPL ratio to lower levels, ending at 2.85%, which marks a significant 23bps and 52bps contraction on a QoQ and YoY basis. Their NPL reserve cover of 81% however, still leaves much to be desired as translates to a 1ppt decline from 2023\u2019s 82%. We note that this is also substantially lower than Industry\u2019s NPL cover of 94%. <\/p>\n\n\n\n

Looking at the bank\u2019s total deposits, it posted a notable growth of 32% YoY and 11% QoQ, driven by CASA deposits increasing by 16% and 11% on a YoY and QoQ basis respectively. SECB\u2019s current CASA ratio of 52% however, remains as one of the lowest in the industry which means that the current rate cut cycle would affect the bank\u2019s NIMs on a greater scale vs peers.<\/p>\n\n\n\n

Driving growth<\/strong><\/p>\n\n\n\n

Net loans closed 26% higher YoY at P678-Billion attributable to sustained growth in Retail and MSME loans which rose by 37% driven by home loans (+19%), credit cards (+64%), auto loans (+54%), and MSME loans (+54%). Wholesale loans also accelerated by 21% YoY. We note management stating an element of seasonality for their wholesale loans which typically build up by December and then carried through January.<\/p>\n\n\n\n

The company also stated that the nature of booked loans is largely working capital related and short-term in nature. Given that the company\u2019s delinquency metrics are not showing deterioration, which means that loan quality is holding up across all categories, particularly in retail, we therefore expect growth for this segment to continue trending higher at a relatively stable pace moving forward.<\/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>