2014年10月10日星期五

CIMB-RHB-MBSB’s mega-merger


Author: kltrader   |   Publish date: Fri, 10 Oct 11:47

  • Outright  winner  is  MBSB  with  potential  cash  option  at MYR2.82/share (+19% upside).
  • Positive  for  RHB  -  upgrade  to  BUY  with  a  higher  TP  of MYR10.45. Positive for OSK with a FV MYR2.64.
  • HOLD on CIMB with an unchanged TP of MYR7.60.

What’s New

CIMB-RHB-MBSB  has  announced  details  of  their  merger  which entails  taking  MBSB  private  at  MYR2.82/sh,  and  merging  CIMB  and RHB via a share swap of 1.38 CIMB shares for every 1 RHB share. 

What’s Our View

The  outright  winner,  is  MBSB  (MBS  MK;  Not  Rated,  FV:  MYR2.82), which  is to  be taken  private  at  MYR2.82/sh. Investors  will have an option of cash or RCPS in a new unlisted mega-Islamic bank, which would likely be palatable only to strategic shareholders.
The  deal  is  neutral  on  CIMB,  whereby  we  estimate  a  post-merger dilution in FY15 ROE to 11.4% from 12.3%. Pegging on a lower FY15 P/BV target of 1.35x (FY14 1.7x previously) results in an unchanged TP  of  MYR7.60,  which  translates  to  a  FY15  PER  of  12.2x,  in  line with Maybank. We maintain our HOLD call on CIMB.
Valuing CIMB at MYR7.60/sh and taking into account the 1.38 swap ratio,  RHB  would  be  valued  at  MYR10.45  (+20%  upside).  Our  TP  is raised to MRY10.45, and we upgrade RHB to BUY from HOLD.
OSK  (OSK  MK;  Not  Rated)  could  eventually  hold  just  3%  in  the enlarged  entity  and  we  think  it  would  make  commercial  sense  to dispose off this shareholding. On revaluing its stake and applying a 20% discount to its RNAV, we derive a FV of MYR2.64 (+15% upside).
Key  risks  at  this  juncture  would  be  (i)  regulatory  approvals,  (ii) EPF’s right to vote on this deal and (iii) Aabar’s acceptance.
Source: Maybank Research - 10 Oct 2014

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