Maybank – Annual Report 2015

Maybank

Face: Tigress

Photo source: Flickr – John Ragai

Some of you may have noticed my purchase of 1,500 units of Malayan Banking Berhad stocks back in January 2016. I managed to snag the units at a very low price – RM8.30 per share at the time during a brief loss of confidence in Malaysia’s banking industry then. The price of Maybank has since risen to RM9.12 as at 7 April 2016 which translates to a 9.88% unrealized profit for me in 3 months. What’s even more amazing is that at RM9.12, Maybank’s dividend yield is at a cool 5.9% per annum (based on previous dividends), even higher than some of the REITs out there.

Annual Report

Maybank Annual Report 2015

I’ve had Malayan Banking Berhad in my sights for awhile and when the opportunity came this year due to some minor turbulence, I did not hesitate and pounced when the price dropped back in January 2016. Maybank’s annual report came in the mail recently and I’ve uploaded it here for your convenience. I’ve had a brief stint working for Maybank Investment a few years back in the research department. I learnt a lot from them and I’ve been reading their reports every week without fail. I especially like the analysts who cover the airlines industry, develepoers & construction, banking and gaming.

In terms of assets, Maybank is the largest in Malaysia and 4th in ASEAN. I don’t see them catching up to the likes of UOB, OCBC and DBS any time soon though. I’m fine with Maybank being the largest in Malaysia, they are the most recognized and widely used bank in Malaysia, with most government institutions as well as MNCs using their services, for that reason alone the company is worth looking at.

Maybank’s foothold in Indonesia is getting stronger by the year, their branches there outnumber branches in Malaysia. Profits from Indonesia also increases y-o-y. Provided that Maybank is allowed to do business in Indonesia uninterrupted by the government there, I strongly believe Indonesia will be a major cash generator for Maybank. With the huge population there, the banking fees alone will be mind numbing.

Maybank_AR2015

Maybank_AR2015 Maybank_AR2015-Financial_Statements

I will be brief and summarize simply the Annual Report and let you go through it in your own time. Key items to note in regards to Maybank’s 2015 financial performance:

  1. Increased net profit;
  2. Increased deposits from customers;
  3. Increase in net assets; and
  4. Increased shareholder’s equity.

I do believe that the bank did not do as well as expected for the year 2015. I will continue to monitor the quarterly reports as well as compare 2016’s annual report next year.  The other outstanding bank in the country is Public Bank headed by very experienced leaders and managers. Observant readers will notice that I recently added Public Bank to my portfolio – The Freedom Fund. I will be writing on Public Bank in the near future.

For now, thank you all for reading.

Do you own shares in any banks or financial institutions in Malaysia? How do you like them how did they perform in 2015?

IGB REIT – Annual Report 2015

What is a REIT?

So first and foremost, what is a Real Estate Investment Trust (REIT)? A REIT is a company that owns, and in most cases, operates income-producing real estate. They are listed on the KLSE and its shares are open to the public to purchase.  Learn more about them here in my Complete Guide to REITs in Malaysia.

Now, on to one of my favorite REITs – IGB REIT.

IGB REIT

IGB REIT Annual Report

I was awaiting the arrival of the dividend voucher from IGB REIT when to my surprise, it came together with its annual report in the form of a CD. Personally, I like how companies are mailing their annual reports in a CD instead of the old days when they printed thick copies of the reports and mailed those to every single shareholder.

Before we go into the details, you may download and open IGB REIT’s annual report here: IGBReit AR15

For the benefit of those who don’t know, IGB REIT’s property portfolio consists of Mid Valley Megamall and The Gardens Mall in the Klang Valley. Their main shareholders are IGB Corporation Berhad and Goldis Berhad whose main shareholders are the family of IGB Corp’s co-founder the late Datuk Tan Kim Yeow.

I will attempt to brief everyone on some of the more significant details of IGB REIT.

Balance Sheet

Dear shareholders of IGB REIT, these are yours.

IGB REIT The Gardens Mall

Photo Source: thisismetrixit.blogspot.com

IGB REIT Mid Valley Megamall

Photo Source: mapio.net

There were no significant changes in the REIT’s assets and liabilities, value of the company’s investment properties stood at RM4.9 billion. Mid Valley Megamall is valued at RM3.61 billion and The Gardens Mall at RM1.28 billion by Henry Butcher as at 31 December 2015.

Cashflow

A Real Estate Investment Trust’s (REIT) main source of income comes from rentals and the company’s gross rental income increased by 7% in 2015 to RM380 million a year. I particularly liked that IGB REIT also managed to not only keep expenses low, they were able to reduce it by almost RM3 million a year.

However, a lower net profit was declared for 2015 mainly because there was no changes in the fair value of the REIT’s properties. Generally most properties held by REITs would have an increase in value every year, I am not concerned with this aspect of IGB REIT because fair value of properties are paper gains, the true value of a REIT comes from its rental income.

Apart from rental income, I’d like to bring your attention to their Other Income section mainly car park, advertising an kiosk rental. The REIT is rakin in RM44 million a year in parking fees alone, RM6 million for advertisements and a cool RM23 million from renting out kiosk booths. All of which have increased compared to 2014.

My Holdings

IGB REIT has been in my PORTFOLIO since July 2015 with my gross investment at RM1.3152. I’ve been adding to my position when the price was right. As of today (3/3/16), the market price is RM1.54, giving me an unrealized capital gain of 16.33%. I have also received dividend income from IGB REIT recently amounting to RM766.08. Total gains including dividends received stands at 20.93%.

At the current price, dividend yield for the REIT is still above 5%, I will consider disposing off some of my shares in IGB REIT when the yield dips below the 5% mark and will top up on the REIT depending on their next quarterly results.

Do you own any REITs in your investment portfolio? 

Thanks for reading.