RHBCAP (1066) - RHB Capital Bhd - Resignation of group MD
Target RM10.50 (Stock Rating: ADD)
We are not surprised by the resignation of RHB Capital’s group MD as this has been the subject of market speculation for the past 2-3 years. The change in MD will have some negative impact on the group but we think that this will not be significant because of (1) the solid management team, and (2) the control of a strong shareholder. Our DDM-based target price (COE of 11.8%; LT growth of 4%) is unchanged. RHB Capital remains an Add and our top pick for the sector given its enticing valuations (FY15 P/E of 9.3x and P/BV of 1.1x) and bright earnings prospects.
What Happened
Yesterday, RHB Banking Group announced to Bursa Malaysia that Mr Kellee Kam Chee Khiong, the group MD of RHB Capital, had tendered his resignation. The group has a succession plan in place and will execute a transition plan for a smooth handover of responsibilities to his potential successor. Mr Kellee will remain as group MD until the end of the transition period, the date of which will be announced later.
What We Think
We are not terribly surprised by Mr Kellee’s resignation as the market has been speculating about his departure for the past 2-3 years. This will be negative for the group as we view Mr Kellee as a capable manager and leader. He has been with RHB Capital for about 12 years (since 2003) and has contributed to the transformation of RHB Capital over the past 7-8 years.
However, we believe that the impact of this will not be significant because (1) the group will still have a solid management team even after Kellee’s departure, (2) EPF is still firmly in control of the group, and (3) we think that it will stick to its 4-year transformation programme, dubbed IGNITE 2017.
Judging by the company’s announcement, our guess is that RHB may scout for Kellee’s replacement internally. If this is the case, we think that Dato’ Khairussaleh Ramli will be the most likely candidate to fill the position given his strong experience in the sector. He was previously CFO of Maybank.
What You Should Do
Stay invested in RHB Capital, which is our top pick among Malaysian banks for its attractive valuations and positive earnings prospects. We think that the change in group MD, while negative, will not have a significant impact on the company. We see any share price weakness arising from the resignation of the MD as a buying opportunity.
Source: CIMB Daybreak - 16 February 2015
Target RM10.50 (Stock Rating: ADD)
We are not surprised by the resignation of RHB Capital’s group MD as this has been the subject of market speculation for the past 2-3 years. The change in MD will have some negative impact on the group but we think that this will not be significant because of (1) the solid management team, and (2) the control of a strong shareholder. Our DDM-based target price (COE of 11.8%; LT growth of 4%) is unchanged. RHB Capital remains an Add and our top pick for the sector given its enticing valuations (FY15 P/E of 9.3x and P/BV of 1.1x) and bright earnings prospects.
What Happened
Yesterday, RHB Banking Group announced to Bursa Malaysia that Mr Kellee Kam Chee Khiong, the group MD of RHB Capital, had tendered his resignation. The group has a succession plan in place and will execute a transition plan for a smooth handover of responsibilities to his potential successor. Mr Kellee will remain as group MD until the end of the transition period, the date of which will be announced later.
What We Think
We are not terribly surprised by Mr Kellee’s resignation as the market has been speculating about his departure for the past 2-3 years. This will be negative for the group as we view Mr Kellee as a capable manager and leader. He has been with RHB Capital for about 12 years (since 2003) and has contributed to the transformation of RHB Capital over the past 7-8 years.
However, we believe that the impact of this will not be significant because (1) the group will still have a solid management team even after Kellee’s departure, (2) EPF is still firmly in control of the group, and (3) we think that it will stick to its 4-year transformation programme, dubbed IGNITE 2017.
Judging by the company’s announcement, our guess is that RHB may scout for Kellee’s replacement internally. If this is the case, we think that Dato’ Khairussaleh Ramli will be the most likely candidate to fill the position given his strong experience in the sector. He was previously CFO of Maybank.
What You Should Do
Stay invested in RHB Capital, which is our top pick among Malaysian banks for its attractive valuations and positive earnings prospects. We think that the change in group MD, while negative, will not have a significant impact on the company. We see any share price weakness arising from the resignation of the MD as a buying opportunity.
Source: CIMB Daybreak - 16 February 2015
