MBSB (1171) : Potential revision in Malaysia Building Society’s offer price
Malaysia Building Society Bhd
(Dec 16, RM2.35)
Maintain “add” with a target price (TP) of RM2.75: The Edge weekly reported that the due diligence (Due-D) team involved in the “mega merger” exercise involving CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) is seeing some issues in the provisioning methodology being adopted at MBSB versus CIMB and RHBCap. Although the Due-D on MBSB has not been concluded, there are concerns that MBSB currently adopts a less stringent impairment policy and hence, further provisioning may arise. From what we have gathered, there could be a risk of potential revision on the offer price of RM2.82 should there be a need for further provisioning (on collective allowance). We have laid out the impact of additional provisions on MBSB’s book value and the subsequent impact on the offer price.
Based on the worst case scenario of financial year 2014 estimate provisioning rising to 150 basis points (bps) from our current assumption of 38 bps, we estimate a 10 sen downward impact on MBSB’s book value per share, which means a potential revision in offer price from RM2.82 to RM2.63. — AffinHwang Capital Research, Dec 16
http://www.theedgemarkets.com
Malaysia Building Society Bhd
(Dec 16, RM2.35)
Maintain “add” with a target price (TP) of RM2.75: The Edge weekly reported that the due diligence (Due-D) team involved in the “mega merger” exercise involving CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) is seeing some issues in the provisioning methodology being adopted at MBSB versus CIMB and RHBCap. Although the Due-D on MBSB has not been concluded, there are concerns that MBSB currently adopts a less stringent impairment policy and hence, further provisioning may arise. From what we have gathered, there could be a risk of potential revision on the offer price of RM2.82 should there be a need for further provisioning (on collective allowance). We have laid out the impact of additional provisions on MBSB’s book value and the subsequent impact on the offer price.
Based on the worst case scenario of financial year 2014 estimate provisioning rising to 150 basis points (bps) from our current assumption of 38 bps, we estimate a 10 sen downward impact on MBSB’s book value per share, which means a potential revision in offer price from RM2.82 to RM2.63. — AffinHwang Capital Research, Dec 16
http://www.theedgemarkets.com
