RCE Capital Berhad

Kenanga Research gives a buy call for RCE, with a target price of RM1.20. They have issued a total of 9 pages research covering RCE Capital Berhad. If you have access to Kenanga portal, you may go ahead to download and read the report. I would say it is a very comprehensive research report.

Below are some of the highlights from the report:

- Low risk of defaulted payments with automatic salary deduction scheme by ANGKASA

- Effective NPLs of 1.7%. The bulk of defaulted payments due to quirks of the deduction system

- Highly conservative general provision of 8% in FY06 to normalise to 2% with FRS139

- Size & speed of loan payout matter more than interest rate to government employees

- Cost-savings from co-operatives’ distribution system

The operating and business model of RCE is as below: