Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
RHB Capital Bhd
(June 20, RM9.56)
Maintain buy at RM9.75 with fair value of RM9.70: The press reported that RHB Capital Bhd's (RHBCap) strategic investor, Abu Dhabi Commercial Bank (ADCB), has signed an agreement with its sister company Aabar Investments PJS to sell its 24.9% stake in RHBCap to the latter for RM10.80 per share. The transaction was widely expected.
ADCB CEO Ala'a Eraiqat said in a press statement that the sale is expected to enhance ADCB's capital ratios. Upon completion of the transaction, ADCB's tier-1 ratio would increase to 14.43% from 12.39%, while the capital-adequacy ratio would rise to 21.11% from 17.03%.
Ala'a said while ADCB had benefited tremendously from its ownership in RHBCap, the management and board are now'' focused on executing its strategy of being an UAE-centric bank.
Aabar CEO Mohamed Badawy Al Husseiny said the purchase would add a core asset to the company's portfolio of financial services investments.
Based on RHBCap's latest book value of RM4.79 per share, the RM10.80 per share price tag would work out to a price-to-book value (P/BV) of 2.25 times. The press reported the price of RM10.80 per share would value the deal at RM5.9 billion, a gain of 51% for ADCB after acquiring the stake for RM3.9 billion.
In terms of the impact on RHBCap, in our view this merely represents a change in strategic shareholder.
While ADCB has been a major shareholder in RHBCap for the past three years, we believe it was largely a passive investor. We believe Aabar is likely to adopt the same stance.
We maintain our fair value for RHBCap at RM9.70, based on a net earnings forecast of RM1.7 billion and a return on equity of 15.4% FY11F leading to a fair P/BV of 1.9 times FY11F. ' AmResearch, June 20
This article appeared in The Edge Financial Daily, June 21, 2011.
Company Name: RHB CAPITAL BHD
| Research House: AMMB | Price Call: BUY | Target Price: 9.70 |
RHB Capital Bhd
(June 20, RM9.56)
Maintain buy at RM9.75 with fair value of RM9.70: The press reported that RHB Capital Bhd's (RHBCap) strategic investor, Abu Dhabi Commercial Bank (ADCB), has signed an agreement with its sister company Aabar Investments PJS to sell its 24.9% stake in RHBCap to the latter for RM10.80 per share. The transaction was widely expected.
ADCB CEO Ala'a Eraiqat said in a press statement that the sale is expected to enhance ADCB's capital ratios. Upon completion of the transaction, ADCB's tier-1 ratio would increase to 14.43% from 12.39%, while the capital-adequacy ratio would rise to 21.11% from 17.03%.
Ala'a said while ADCB had benefited tremendously from its ownership in RHBCap, the management and board are now'' focused on executing its strategy of being an UAE-centric bank.
Aabar CEO Mohamed Badawy Al Husseiny said the purchase would add a core asset to the company's portfolio of financial services investments.
Based on RHBCap's latest book value of RM4.79 per share, the RM10.80 per share price tag would work out to a price-to-book value (P/BV) of 2.25 times. The press reported the price of RM10.80 per share would value the deal at RM5.9 billion, a gain of 51% for ADCB after acquiring the stake for RM3.9 billion.
In terms of the impact on RHBCap, in our view this merely represents a change in strategic shareholder.
While ADCB has been a major shareholder in RHBCap for the past three years, we believe it was largely a passive investor. We believe Aabar is likely to adopt the same stance.
We maintain our fair value for RHBCap at RM9.70, based on a net earnings forecast of RM1.7 billion and a return on equity of 15.4% FY11F leading to a fair P/BV of 1.9 times FY11F. ' AmResearch, June 20
This article appeared in The Edge Financial Daily, June 21, 2011.
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