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Alliance Bank’s (ABMB) 2QFY22 results were above expectations and our FY22/23E net profit forecasts are raised by 29%/8%. With the improved outlook, and on expectations of a rise in the group’s ROE to 7.6% in FY22 and 8.1% in FY23 from 5.9% in FY21, we upgrade the stock to a BUY with a raised TP of MYR3.25 (from MYR2.90) pegging on a CY22 PBV target of 0.7x (unchanged). We also raise our dividend payout ratio to 40% from 25%, and this translates to a decent FY22 dividend yield of 4.5%.

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