Bendigo and Adelaide Bank Limited

 

BEN Details
 
Testing New Concept Stores & Enhancing Customer Relationships are Key Catalysts:Bendigo and Adelaide Bank Limited (ASX: BEN) is engaged in providing wide range of banking and other financial services, which incorporates consumer, business, residential, rural and commercial lending, deposit-taking, payments services, superannuation and wealth management, treasury and foreign exchange services.
 
Shareholding Update: On 10 January 2019, the company announced that UBS Group AG and its related bodies corporate, ceased to be a substantial shareholder of the company, effective from 8 January 2020.
 
Changes in Equity Securities: On 20^th December 2019, the company announced that Marnie Baker, one of the Directors, acquired 50,000Performance Rights, taking the final holdings to 6,22,707 Ordinary Shares, 122,768 Performance Rights and 600 Convertible Preference Shares.
Key Highlights of Basel III Pillar 3 Disclosures to the Market:On November 26, 2019, the company provided Basel III Pillar 3 Disclosures for the September quarter. As on September 30, 2019, Claims secured by residential mortgage stood at $16,906.7 million, up from $16,777.6 million reported as on June 30, 2019. Capital needs for other retail came in at $14,867.1 million at the end of the September quarter, down from $15,066.7 million as on June 30, 2019. Total risk-weighted assets at the end of the September quarter stood at $37,442.4 million as compared to $37,483.1 million as on June 30, 2019. As on September 30, 2019, the common equity tier 1 ratio was reported at 8.68%, down from 8.92% as on June 30, 2019. The company reported gross credit exposure in terms of loan at $60,065.0 million as on September 30, 2019, up from $59,874.3 million as on June 30, 2019.
 
 

Key Metrics (Source: Company Reports)
 
What to Expect: The company is engaged in examining new concept stores to enhance customer experience. Its ‘smart’ new look Norwood branch in South Australia has surpassed anticipations, with a 64% rise in foot traffic and a substantial boost in the business. The company has also worked on reducing the complexity in business to offer better customer experience along with a reduction in cost base. Going forward, it will continue to review further business opportunities to enhance simplification on the platform and deliver cost savings.
 
Valuation Methodology:Price to Cash Flow Multiple Approach
 

P/CF Based Valuation (Source: Thomson Reuters)
 
 Note: All the forecasted figures have been taken from Thomson Reuters, NTM: Next Twelve Months
 
Stock Recommendation: At the current market price of $10.040, the stock is available at a price to earnings multiple of 13.060x. BEN’s share has declined by ~7.78% in the last one year. As per ASX, the stock is trading below the average of its 52-week low and high of $9.370 and $11.740, respectively. The company has a market capitalization of ~$4.97 billion with outstanding shares of ~493.84 million. The company’s achievement of attracting new customers, especially in the younger demographic, gives it a chance to adopt lifelong customer relationships. Considering the above factors, we have valued the stock using P/CFbased relative valuation method and for the purpose,we have taken the peer group - National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (HUB: WBC) and Bank of Queensland Ltd (ASX: BOQ), to name few. Therefore, we have arrived at a target price of higher single-digit growth (in % terms). Hence, we have a watch stance on the stock at the current market price of $10.040, down 0.298% on 13^th January 2020.


BEN Daily Price Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.