Morningstar

Morningstar, Inc.

Equity Bottom-Up

No-moat-rated MyState Limited continues to grow at a fast clip with industry banking data printing a 12% increase in the bank’s home loan book for the year to March 31, 2019. Household deposits increased but at a less impressive 6% for the same period. But strong growth in a very competitive market for a lower loan/valuation ratio, or LVR, higher quality owner-occupier home loans comes at cost, with MyState suffering a sharp fall in net interest margins. Margins declined to 1.82% for first-half…

No-moat-rated MyState Limited’s first-half fiscal 2019 cash profit of AUD 14.4 million or AUD 15.9 cents per share, cps, was down 9% on the previous corresponding period. The result revealed mixed operating metrics. A negative was the dampening of the Tasmanian bank's profitability due to pressure on net interest margin, or NIM, particularly from higher funding costs Conversely, credit quality of its loan book remains impressive. The interim fully franked dividend of AUD 14.25 cents per share…

Our neutral view on the outlook for Tasmania-based no moat-rated MyState is unchanged, but following recent share price weakness is trading at an attractive 12% discount to our AUD 5.00 fair value estimate. Our fiscal 2019 cash earnings forecast of AUD 33 million is unchanged, and is based on moderating loan growth, compressed but stabilised net interest margins, improving cost-efficiency, and very low bad debts. Our fair value estimate implies a fiscal 2019 price/earnings ratio of 12 times and…

Our neutral view on Tasmania-based no-moat-rated MyState is unchanged following our post-result management update. We reaffirm our AUD 5 fair value estimate and fiscal 2019 cash earnings forecast of AUD 33 million. Our fair value estimate implies a fiscal 2019 price/ earnings ratio of 14 times and an attractive fully franked dividend yield of 5.8%, or 8.3% on a grossed-up basis. Our earnings outlook is intact, with average annual EPS growth forecast to be 4% over the five-year forecast period…

No-moat-rated MyState’s fiscal 2018 cash profit of AUD 31.5 million represents a 5% increase on the previous corresponding period, or PCP, but 5% below our fiscal 2018 forecast. Lower-than-expected net interest margins, subdued noninterest income, higher-than-system home loan growth, improved cost efficiency, strong asset quality, and a strong capital position underpin the result. The final fully franked dividend of AUD 14.5 cents per share took total dividends to AUD 28.75 cents per share, an…

Australia

MyState Ltd. is a credit union.  The credit union accepts deposits and offers commercial, home, land, automobile and personal loans; and sponsors credit cards.

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