Equity Analysis /

SBM Holdings: SBM HOLDINGS: 9M 17 – Margin, cost pressures offset good volumes

    Rahul Shah
    Rahul Shah

    Head of Financials Equity Research

    Tellimer Research
    14 November 2017
    Published byTellimer Research
    • Volume growth trumped by high operating and risk costs. Although better than we had expected, SBM’s 9M 17 net profit of MUR1,864mn was down 7% yoy as stronger volumes and operating income were offset by higher operating and risk costs. Q3 17 net profit of MUR554mn was up 33% yoy but down 24% qoq.
    • Maintain our Hold rating as we expect profitability pressures to remain. We expect profitability to remain subdued as the group consolidates its position in Mauritius (where excess liquidity is squeezing asset yields) and expands rapidly outside the island economy (keeping upward pressure on operating and risk costs). Our unchanged target price of MUR6.8 suggests an ETR of -6%.
    • Our preferred bank in Mauritius is MCB Group (MCBG MP, BUY, TP: MUR286.5).