MyState Limited (ASX: MYS) 

MyState Limited (ASX: MYS) is an ASX-listed diversified financial services provider operating through the banking and wealth management segment. Through digital and branch channels, it drives home lending, savings, and transnational banking solutions.

Recommendation Rationale – SELL at AUD 3.435

• Financial Performance: MYS’s total operating income declined ~2.9% in 1HFY24 as compared to 2HFY23. Net interest income was also down ~2.5% over the same time frame. Competition in the home lending and retail deposit markets along with high inflation has impacted Net Interest Margin (NIM), which was down 9 basis points in 1HFY24 vs 2HFY23.
• Outlook: The company remains focused on profitably and sustainably implementing its growth strategy. MYS lending growth is expected to be over 1.0 times the average in FY24, whereas the bank aims to have over 70% of its funding coming from customer deposits. It is anticipated that the bank's return on equity will be in the ambit of 7.5% to 12.5% in FY24. MYS's underlying cost to income ratio is projected to be between 64% and 66%. in FY24.
• Emerging Risks: Change in interest rate, macroeconomic changes, inflationary pressure, key personnel, bad loans, etc.
• Technical Commentary: On the daily chart, MYS prices are trading below the falling trendline resistance zone. Moreover, the momentum oscillator RSI (14-period) is showing a reading of ~54.42 level. However, the prices are trading above the trend-following indicator 21-period SMA, which may act as a support level. An important support level for the stock is placed at AUD 3.16, while the key resistance level is placed at AUD 3.48. 

MYS Daily Chart

Considering that the stock may face some resistance before scaling further upside, given its current trading levels, share price movement, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 3.435, at 10:15 AM AEDT, as of 8 March 2024.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 8 March 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.