RHB Cuts MNRB To Underperform, Cuts Target 17.4%

RHB Research downgrades MNRB Holdings (6459.KU) to Underperform from Market Perform and lowers its fair value to MYR2.81 from MYR3.40, based on 0.6X fiscal FY11 P/NTA. 

The house notes fiscal 1H12 net profit, down 22% on-year at MYR37 million, was below its expectations and made up only 28% of its full-year earnings estimates due to a higher-than-expected 1H claims ratio of 65% vs the house's 60% FY forecast for its reinsurance subsidiary on provisions for expected losses from the Thailand floods.

RHB raises its assumed claims ratio for fiscal FY12 to 66% from 60% previously as the exact losses remain uncertain. It also lowers its fiscal FY12 earnings estimate by 37.4%. "We are wary that after further assessments of the losses in Thailand, MNRB might be further exposed to more losses in the coming quarters," it says. The stock is off 6.3% at MYR2.68.