One of eight Morgans 'high conviction stocks for August' Kina...

One of eight Morgans 'high conviction stocks for August'
Kina Securities (KSL)

KSL is a diversified financial service provider in PNG. The group has two operating divisions, Kina Bank and Kina Wealth Management.
Key reasons to buy Kina Securities

• We think the stock remains mispriced by the market. We expect KSL to produce a record FY18 profit, yet it still trades at a material discount to its IPO price. We forecast a dividend yield of 10.2% for 2018 and 13.4% for 2019.
• The recent ANZ PNG acquisition adds significant inherent value in our view. KSL paid only goodwill and yet the deal is 25-35% accretive post synergies.
• KSL's underlying business metrics continue to track solidly – delivering 20% loan growth, credit quality has been improving and backed by a strong capital position (approx. 17% pro-forma and well above the regulatory minimum of 12%).

We retain our Add recommendation.