[%jHcI%] 
Research by PB
Trading Buy - TP of RM2.95

""Stable Growth Trajectory with Attractive Dividends"

RCE Capital (RCE) is generally involved in the provision of consumer financing  services, with Malaysian civil servants as its end customers. The group has a  unique salary deduction scheme whereby the installments are collected through  monthly installments via two agents namely EXP Payment SB and Angkatan  Koperasi Kebangsaan Malaysia (ANGKASA). Looking ahead, we forecast a 3-year  earnings CAGR of 5%, on stable growth in financing receivables and a stable credit  cost assumption. In addition, for the next 3 years, we forecast a dividend payout  of c.60% as we err on the conservative side on the group’s dividend payout policy  of 60-80% of net profit. We believe that the recent decline in share price represents  a good buying opportunity, therefore we initiate coverage on RCE with a Trading  Buy call and a TP of RM2.95 based on Dividend Discount Model (DDM), implying  a P/BV of 2.4x. 

Analyst(s):
Wong Ling Ling 
[%DNUW%]

$KLSE-RCECAP 
Research by PB
Trading Buy - TP of RM2.95

""Stable Growth Trajectory with Attractive Dividends"

RCE Capital (RCE) is generally involved in the provision of consumer financing  services, with Malaysian civil servants as its end customers. The group has a  unique salary deduction scheme whereby the installments are collected through  monthly installments via two agents namely EXP Payment SB and Angkatan  Koperasi Kebangsaan Malaysia (ANGKASA). Looking ahead, we forecast a 3-year  earnings CAGR of 5%, on stable growth in financing receivables and a stable credit  cost assumption. In addition, for the next 3 years, we forecast a dividend payout  of c.60% as we err on the conservative side on the group’s dividend payout policy  of 60-80% of net profit. We believe that the recent decline in share price represents  a good buying opportunity, therefore we initiate coverage on RCE with a Trading  Buy call and a TP of RM2.95 based on Dividend Discount Model (DDM), implying  a P/BV of 2.4x. 

Analyst(s):
Wong Ling Ling 
wong.lingling@publicinvestbank.com.my