One of eight Morgans 'high conviction stocks for August' Kina Securities (KSL)
KSL is a diversified financial service provider in PNG. The group has two operating divisions, Kina Bank and Kina Wealth Management.
Key reasons to buy Kina Securities
We think the stock remains mispriced by the market. We expect KSL to produce a record FY18 profit, yet it still trades at a material discount to its IPO price. We forecast a dividend yield of 10.2% for 2018 and 13.4% for 2019.
The recent ANZ PNG acquisition adds significant inherent value in our view. KSL paid only goodwill and yet the deal is 25-35% accretive post synergies.
KSL's underlying business metrics continue to track solidly – delivering 20% loan growth, credit quality has been improving and backed by a strong capital position (approx. 17% pro-forma and well above the regulatory minimum of 12%).
We retain our Add recommendation.
KSL Price at posting:
93.5¢ Sentiment: Buy Disclosure: Held
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