OSK HOLDINGS BERHAD (5053 - OSK)
Do you missed out a steady growth PBB in the past 20 years? Regret that why you didn't buy PBB in the past few years? Or maybe we are still young at the moment and we didn't alert on all this and missed out the golden opportunity. Well, the only thing that we can do right now is to find a potential stock just like another PBB. If you missed out PBB, don't ever missed out osk again . OSK might be the next shinning rising star with its estimated future growth and prospect.
The Company is an investment holding company.
The OSK Holdings Group is engaged in the following main businesses:
a) Capital financing – Capital financing activities
b) Property Investment - Management and letting of properties
c) Investment Holding – Investing activities and other insignificant business segment
OSK Holdings Berhad is the flagship company of the OSK group of companies which also comprises OSK Property Holdings Berhad and OSK Ventures International Berhad. All three companies are independently listed on Bursa Malaysia.
Following completion of the acquisition of OSK Investment Bank by RHB Capital Berhad, OSK Investment Bank is now part of the RHB Banking Group. Therfore, investor need to take a look on RHB Capital Berhad in order to analyse for OSK Holdings Berhad because the revenue will have a direct influence after the acquisition occurred.
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RHB CAPITAL BHD (1066 - RHBCAP)
1. Fourth largest fully integrated financial services group in Malaysia after MAYBANK,CIMB , PUBLIC bank.
2. Today, the share price fell from the highest RM10.92 to RM8.39 (04-06-14), a decrease of 22.71%. The share price need 30.3% increase in order to return to the prevailing high prices.
3. List of 3 largest shareholders (as at 3 March 2014) :
• EMPLOYEES PROVIDENT FUND BOARD : 40.78%
• AABAR INVESTMENTS PJS : 21.43% , average cost : RM 10.80
• OSK HOLDINGS BERHAD : 9.91% , average cost : RM 7.36
4. NTA : RM 6.6 , share price 1.28 times to NTA , 2 times above if compare with the sector average. PE : 11.66 which is a premium over the sector average of PE : 14.
5. IGNITE 2007 – Key target to achieve by 2017
• Return of equity (ROE) – a measure of probability – of over 14% by 2017 from 11.5% last year
• Double its revenue contribution from Singapore to 10% by 2017
• Islamic banking to account for at least 30% of the group’s total financing assets by 2017
• Over sea operations to account for at least 30% of total revenue by 2017 from 11 % currently
• Scale growth on SME ( Small and Medium Enterprises) and commercial banking
6. Ambitious long-term goal
• Become one of the top 3 banking groups in Malaysia by size and performance and top eight in Asean by 2020.” In December 2013, RHB Cap’s total assets amounted to only 34% of Malayan Banking Bhd’s and 52% of CIMB’s. Its assets were 62.5% of that of its closest peer, Public Bank Bhd.”
• Initiative for regional expansion with planned M&As in Indonesia, the Philippines and China with 40% revenue contribution from international operations.
News & Superiority
• RHB Capital’s biggest shareholder, EPF (Employees Provident Fund) as a support.
• It has been speculated that there are merger plans between RHB Bank and Malaysia Building Society Bhd (MBSB), as they share the same owner. The Employees Provident Fund (EPF) holds a 44.84% stake in RHB Cap (which, in turn, owns RHB Bank) and 65.5% in MBSB, a non-bank lender to civil servants. Recently, speculation was rife that the EPF would privatise RHB Cap and proceed to merge the bank with MBSB.
• Aabar bought 22% of RHB for RM10.80 a share from Abu Dhabi Commercial Bank in 2011, and the purchase price is 20% above RHB’s current share price. He was unlikely to favour the privatisation. In order for RHB Cap to be successfully privatised, the potential bid put forward may have to be around the RM10.80 per share level.
• RHB Investment Bank Bhd ( RHB IB) has entered into a strategic partnership with Portugal-based Espirito Santo Investment Bank ( ESIB) as part of its efforts to broaden its reach into global markets without having to physically set up very expensive outfits in Europe or in North America.
• RHB Capital Bhd (RHB Cap), plans to acquire 40% stake in Bank Mestika Dharma of Indonesia for RM651mil. If there are no positive developments by this month, the company may not seek further extension for the deal.
Target Price
• Alliance EPS (sen) 81.4（2014） 92.3（2015） 106.1（2016）
• CIMB RM11.60
• HLG RM9.59
• MIDF RM9.50
Summary:
RHBCAP have a clear goals and aggressively expanding the oversea markets. If based on average of 12% to 15% profit growth, share price is expected to takes at least 3 years back to prevailing high price of RM 10.92. The share price maybe accelerate and is definitely not a problem to reach previous high. if EPF intervene in the M&A and the expansion at oversea is running smooth.
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OSK HOLDINGS BERHAD (5053 - OSK)
1. RHB Cap signed the conditional share purchase agreement with OSK Holdings to acquire 100% of OSK Investment Bank Bhd (OSK IB) for 245 million new RHB Cap shares worth RM7.36 each, and RM147.5mil in cash on April 2012.
2. NTA : RM 2.68 ( From Annual Report of 2013) , current share price trading at RM 1.67 ( 04.06.2014)
3. Currently 80% of the profits is come from RHBCAP, 20% is from the Capital Financing and Property Investment (Capital Financing and Property Investment are estimated to provide annual earnings of RM32m)
4. OSK will also develop the land next to Plaza OSK and make it as a recurring income for the group. This commercial and retail project will have a development cost (GDC) of RM300mil to RM400mil with the gross development value (GDV) around RM1bil with a net lettable area of one million square feet and expected to start work on it in the fourth quarter and will take three to four years to complete.
5. 2 times of dividend payment every year, DY: around 4.44% (share price of RM1.67)
News & Superiority
• The possibility looking into real estate investment trust (REIT) which could unlock further value for the group. ( The possibility of joint industry with OSKP and PJDEV)
• Looking to acquire new businesses and will be announce a deal in the next few months. (Announcement in AGM on April 2014)
• The possibility of acquisitions OSKP or PJDEV as a start to a new business in property industry. This is easy to achieve as both company big shareholder belongs to Ong Leong Huat and his family.
• By referring to RHBCAP market value of RM21368m, OSK holds 9.91% of RHBCAP, the market value should have at least RM2217m, but the current market value is only RM1618m (not including the total asset of the company). Thus, the stock is undervalued, is just like you buy RHBCAP at a cheaper price.
Summary
At this stage, RHBCAP and its subsidiary company not only brings stable and upside potential revenue but also will develop in the new business and the possibility unlock the property segment and listing as REIT. So, the future prospect still remain bright.
Overall Conclusion :
OSK prospect is promising, the group continue and maintain its dividends payment. Furthermore, RHBCAP and OSK both are ambitious and moving forward to achieve the goal, share price accelerated in the future should not be a big issue. This is a long term investment and suitable for those investor that can hold at least 3 years.
Do you missed out a steady growth PBB in the past 20 years? Regret that why you didn't buy PBB in the past few years? Or maybe we are still young at the moment and we didn't alert on all this and missed out the golden opportunity. Well, the only thing that we can do right now is to find a potential stock just like another PBB. If you missed out PBB, don't ever missed out osk again . OSK might be the next shinning rising star with its estimated future growth and prospect.
The Company is an investment holding company.
The OSK Holdings Group is engaged in the following main businesses:
a) Capital financing – Capital financing activities
b) Property Investment - Management and letting of properties
c) Investment Holding – Investing activities and other insignificant business segment
OSK Holdings Berhad is the flagship company of the OSK group of companies which also comprises OSK Property Holdings Berhad and OSK Ventures International Berhad. All three companies are independently listed on Bursa Malaysia.
Following completion of the acquisition of OSK Investment Bank by RHB Capital Berhad, OSK Investment Bank is now part of the RHB Banking Group. Therfore, investor need to take a look on RHB Capital Berhad in order to analyse for OSK Holdings Berhad because the revenue will have a direct influence after the acquisition occurred.
-------------------------------------------------------------------------------------------------------------------------
RHB CAPITAL BHD (1066 - RHBCAP)
1. Fourth largest fully integrated financial services group in Malaysia after MAYBANK,CIMB , PUBLIC bank.
2. Today, the share price fell from the highest RM10.92 to RM8.39 (04-06-14), a decrease of 22.71%. The share price need 30.3% increase in order to return to the prevailing high prices.
3. List of 3 largest shareholders (as at 3 March 2014) :
• EMPLOYEES PROVIDENT FUND BOARD : 40.78%
• AABAR INVESTMENTS PJS : 21.43% , average cost : RM 10.80
• OSK HOLDINGS BERHAD : 9.91% , average cost : RM 7.36
4. NTA : RM 6.6 , share price 1.28 times to NTA , 2 times above if compare with the sector average. PE : 11.66 which is a premium over the sector average of PE : 14.
5. IGNITE 2007 – Key target to achieve by 2017
• Return of equity (ROE) – a measure of probability – of over 14% by 2017 from 11.5% last year
• Double its revenue contribution from Singapore to 10% by 2017
• Islamic banking to account for at least 30% of the group’s total financing assets by 2017
• Over sea operations to account for at least 30% of total revenue by 2017 from 11 % currently
• Scale growth on SME ( Small and Medium Enterprises) and commercial banking
6. Ambitious long-term goal
• Become one of the top 3 banking groups in Malaysia by size and performance and top eight in Asean by 2020.” In December 2013, RHB Cap’s total assets amounted to only 34% of Malayan Banking Bhd’s and 52% of CIMB’s. Its assets were 62.5% of that of its closest peer, Public Bank Bhd.”
• Initiative for regional expansion with planned M&As in Indonesia, the Philippines and China with 40% revenue contribution from international operations.
News & Superiority
• RHB Capital’s biggest shareholder, EPF (Employees Provident Fund) as a support.
• It has been speculated that there are merger plans between RHB Bank and Malaysia Building Society Bhd (MBSB), as they share the same owner. The Employees Provident Fund (EPF) holds a 44.84% stake in RHB Cap (which, in turn, owns RHB Bank) and 65.5% in MBSB, a non-bank lender to civil servants. Recently, speculation was rife that the EPF would privatise RHB Cap and proceed to merge the bank with MBSB.
• Aabar bought 22% of RHB for RM10.80 a share from Abu Dhabi Commercial Bank in 2011, and the purchase price is 20% above RHB’s current share price. He was unlikely to favour the privatisation. In order for RHB Cap to be successfully privatised, the potential bid put forward may have to be around the RM10.80 per share level.
• RHB Investment Bank Bhd ( RHB IB) has entered into a strategic partnership with Portugal-based Espirito Santo Investment Bank ( ESIB) as part of its efforts to broaden its reach into global markets without having to physically set up very expensive outfits in Europe or in North America.
• RHB Capital Bhd (RHB Cap), plans to acquire 40% stake in Bank Mestika Dharma of Indonesia for RM651mil. If there are no positive developments by this month, the company may not seek further extension for the deal.
Target Price
• Alliance EPS (sen) 81.4（2014） 92.3（2015） 106.1（2016）
• CIMB RM11.60
• HLG RM9.59
• MIDF RM9.50
Summary:
RHBCAP have a clear goals and aggressively expanding the oversea markets. If based on average of 12% to 15% profit growth, share price is expected to takes at least 3 years back to prevailing high price of RM 10.92. The share price maybe accelerate and is definitely not a problem to reach previous high. if EPF intervene in the M&A and the expansion at oversea is running smooth.
--------------------------------------------------------------------------------------------------------------------------------------------
OSK HOLDINGS BERHAD (5053 - OSK)
1. RHB Cap signed the conditional share purchase agreement with OSK Holdings to acquire 100% of OSK Investment Bank Bhd (OSK IB) for 245 million new RHB Cap shares worth RM7.36 each, and RM147.5mil in cash on April 2012.
2. NTA : RM 2.68 ( From Annual Report of 2013) , current share price trading at RM 1.67 ( 04.06.2014)
3. Currently 80% of the profits is come from RHBCAP, 20% is from the Capital Financing and Property Investment (Capital Financing and Property Investment are estimated to provide annual earnings of RM32m)
4. OSK will also develop the land next to Plaza OSK and make it as a recurring income for the group. This commercial and retail project will have a development cost (GDC) of RM300mil to RM400mil with the gross development value (GDV) around RM1bil with a net lettable area of one million square feet and expected to start work on it in the fourth quarter and will take three to four years to complete.
5. 2 times of dividend payment every year, DY: around 4.44% (share price of RM1.67)
News & Superiority
• The possibility looking into real estate investment trust (REIT) which could unlock further value for the group. ( The possibility of joint industry with OSKP and PJDEV)
• Looking to acquire new businesses and will be announce a deal in the next few months. (Announcement in AGM on April 2014)
• The possibility of acquisitions OSKP or PJDEV as a start to a new business in property industry. This is easy to achieve as both company big shareholder belongs to Ong Leong Huat and his family.
• By referring to RHBCAP market value of RM21368m, OSK holds 9.91% of RHBCAP, the market value should have at least RM2217m, but the current market value is only RM1618m (not including the total asset of the company). Thus, the stock is undervalued, is just like you buy RHBCAP at a cheaper price.
Summary
At this stage, RHBCAP and its subsidiary company not only brings stable and upside potential revenue but also will develop in the new business and the possibility unlock the property segment and listing as REIT. So, the future prospect still remain bright.
Overall Conclusion :
OSK prospect is promising, the group continue and maintain its dividends payment. Furthermore, RHBCAP and OSK both are ambitious and moving forward to achieve the goal, share price accelerated in the future should not be a big issue. This is a long term investment and suitable for those investor that can hold at least 3 years.
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