Company Name: MALAYAN BANKING BHD
| Research House: AMMB | Price Call: HOLD | Target Price: 9.80 |
AMResearch has kept its "hold" rating on Malayan Banking Bhd (Maybank), with a fair value of RM9.80 per share, pending changes to the bank's capital structure.
"We have earlier highlighted in our recent report that there may be changes to the banking level common equity tier 1 (CET1) ratio if Maybank is required tolocally-incorporate its operations in Singapore.
If the Singapore operations have to be incorporated, the company affirmed that it will consider it as an investment in subsidiary. This may lead to someimpact on the banking entity's CET1 ratio," AmResearch said in a report yesterday.
The firm said its sensitivity analysis shows that the banking level CET1 ratio will be at 7.92 per cent by 2018, assuming it incorporates its operations inSingapore.
"Assuming a comfortable banking CET1 ratio of 10 per cent, Maybank may possibly need to raise RM7.6 billion in fresh capital. If the need arises, we believethat Maybank is likely to consider another new share placement rather than a rights issue. This is because the company believes that its last rights issuein 2009 had led to a big decline in market capitalisation then," the research house added.
"Notwithstanding the more dilutive impact of a rights issue - which is normally priced at a larger discount versus an issuance of new shares - we prefer therights issue as it would allow all shareholders to have a fair participation in the
exercise," said AmResearch.
No comments:
Post a Comment