Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
Research House: HWANGDBS
KUALA LUMPUR: Hwang DBS Vickers Research is maintaining a Buy on Hong Leong Bank with a target price of RM10.50.
"Our RM10.50 target price is based on the Gordon Growth Model and implies 2.2x CY11 BV, with the following assumptions: 16% ROE, 4% long-term growth and 9.4% cost of equity," it said on Monday, April 26.
Last Friday, April 23, Hong Leong Bank and EON Cap submitted applications to Bank Negara on the former's offer. Target to hold EGM by end May 2010. Hong Leong Bank also plans to raise capital via rights issue (up to RM1.6bn) and issue of capital qualifying securities (up to RM1.8bn)
"Maintain Buy and RM10.50 TP. We like Hong Leong Bank for its strong domestic franchise, ability to leverage on its low loan-to-deposit ratio and its regional expansion plans," it said.
Hwang DBS Vickers Research said based on the announcement, it appears that Hong Leong Bank is sticking to its all cash offer for EON Cap, which it plans to fund with internally generated funds.
Subsequently, Hong Leong Bank intends to strengthen its balance sheet and reinforce its capital base by (i) raising up to RM1.6bn via rights issue, and (ii) raising up to RM1.8bn via the issue of capital qualifying securities.
"The rights issue price will be fixed later. In our scenarios, we assumed it would be a combination of both. We believe that upon completion of these exercises, Hong Leong Bank's Tier-1 CAR would at least be restored to 10%," it said.
Company Name: HONG LEONG BANK BHD
Research House: HWANGDBS
KUALA LUMPUR: Hwang DBS Vickers Research is maintaining a Buy on Hong Leong Bank with a target price of RM10.50.
"Our RM10.50 target price is based on the Gordon Growth Model and implies 2.2x CY11 BV, with the following assumptions: 16% ROE, 4% long-term growth and 9.4% cost of equity," it said on Monday, April 26.
Last Friday, April 23, Hong Leong Bank and EON Cap submitted applications to Bank Negara on the former's offer. Target to hold EGM by end May 2010. Hong Leong Bank also plans to raise capital via rights issue (up to RM1.6bn) and issue of capital qualifying securities (up to RM1.8bn)
"Maintain Buy and RM10.50 TP. We like Hong Leong Bank for its strong domestic franchise, ability to leverage on its low loan-to-deposit ratio and its regional expansion plans," it said.
Hwang DBS Vickers Research said based on the announcement, it appears that Hong Leong Bank is sticking to its all cash offer for EON Cap, which it plans to fund with internally generated funds.
Subsequently, Hong Leong Bank intends to strengthen its balance sheet and reinforce its capital base by (i) raising up to RM1.6bn via rights issue, and (ii) raising up to RM1.8bn via the issue of capital qualifying securities.
"The rights issue price will be fixed later. In our scenarios, we assumed it would be a combination of both. We believe that upon completion of these exercises, Hong Leong Bank's Tier-1 CAR would at least be restored to 10%," it said.
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