Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
The proposed sale of Kurnia Insurans (M) Bhd to AmG Insurans Bhd takes another step forward. AMMB Holdings Bhd (AMM MK, Hold, TP: RM5.70) announced yesterday that it had received the Finance Ministry's approval, through Bank Negara, for the acquisition of a 100% equity interest in Kurnia Insurans by AmG. AMMB has 51% stake in AmG, while Kurnia Insurans is wholly owned by Kurnia Asia Bhd. (StarBiz)
Company Name: AMMB HOLDINGS BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 5.70 |
The proposed sale of Kurnia Insurans (M) Bhd to AmG Insurans Bhd takes another step forward. AMMB Holdings Bhd (AMM MK, Hold, TP: RM5.70) announced yesterday that it had received the Finance Ministry's approval, through Bank Negara, for the acquisition of a 100% equity interest in Kurnia Insurans by AmG. AMMB has 51% stake in AmG, while Kurnia Insurans is wholly owned by Kurnia Asia Bhd. (StarBiz)
Comment: Although the details have yet to be revealed, we ran through some preliminary estimates to gauge the impact on AMMB. Kurnia Asia's current market cap is RM952m on a P/BV of 2.4x and consensus PE of 15x. AMMB's share of the acquisition is 51% or RM485m which is just 2.6% of AMMB's market cap of RM19bn, so there should be no significant impact on AMMB. Furthermore, AMMB is only acquiring Kurnia's Malaysia general insurance subsidiary, and we think unlikely to pay more than 2x P/BV, so AMMB's share of the acquisition cost is likely to be less than RM485m. At 2x P/BV, the acquisition will be on a PE of 12.5x which is in line with AMMB's PE and hence neutral on its valuations. (Hon Sze)
Source: ECM Newz Bits 05 April 2012
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