Kenanga Analysis ups BIMB goal worth, retains Outperform – Enterprise Information

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Kenanga Research ups BIMB target price, retains Outperform - Business News
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KUALA LUMPUR: Kenanga Analysis has revised its goal worth barely for BIMB Holdings Bhd to RM5.05 from RM4.95 and retained its Outperform name.
 
The analysis home mentioned on Thursday the upper goal worth was primarily based on a blended FY19E price-to-book worth/ price-to-earnings (PB/PE) ratio of 1.5 occasions /11.9 occasions (unchanged).

 This was with price-to-book at one-standard deviation -level beneath the five-year imply to mirror the chance of uncertainty on the home/exterior entrance.

Kenanga Analysis mentioned the Outperform name is maintained as its increased loans goal with a ahead returns on fairness (ROE) of greater than 14% (vis-à-vis Hong Leong Financial institution with a ahead ROE of 11%) makes it a extra enticing proposition. 

At present worth, dividend yield of 4.4% is second solely to Maybank (6.3%).

On Wednesday, BIMB introduced a partial redemption of its 10-year unrated Islamic securities (Sukuk Murabahah) of nominal worth at RM1.66bil (issued in December 2013 and absolutely subscribed by Lembaga Tabung Haji). 

The partial redemption quantities to RM609.4mil in nominal worth. As at Sept 30, 2018, the e-book worth of the sukuk was at RM1.34bil,  thus the redemption of RM609.4mil is recorded at a e-book worth of circa RM500mil.

Recap, the Islamic sukuk has been a thorn in BIMB ever for the reason that information of a proposed restructuring (with the holding firm BIMB to get replaced with Financial institution Islam taking on the itemizing standing put up restructuring), with the redemption of the Sukuk (on the holding firm stage) might be by way of proceeds raised from a rights subject (to repay the RM1.34bil debt); therefore diluting its shares.

“We’re optimistic on this announcement; giving a transparent indication that BIMB is not going to be elevating proceeds by way of a rights subject in redeeming the Sukuk ought to the restructuring happen. 

“Recap additionally that we highlighted our view {that a} rights subject is not going to probably be raised (to clear the Sukuk) as BIMB’s Capital Ratio and CET1 are recorded at 15.6% and 12.7% respectively (on the financial institution stage), is satisfactory to repay the RM1.34bil Sukuk liabilities. 

“We perceive that the above redemption just isn’t by way of retained earnings however by way of inside money and funds. We additionally perceive that with the RM500mil redemption, there might be a value saving of circa RM31mil thus enhancing its bottom-line shifting ahead,” mentioned Kenanga Analysis.



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