DRB (BUY)
Affin In-Talk for Muamalat Stake
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DRB-Hicom has received approval from Bank Negara Malaysia to commence negotiations with Affin Holdings to reduce its 70% stake in Bank Muamalat to 40%.
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We have ascribed 1.2x P/B for Bank Muamalat, contributing to RM1.4bn or RM0.72/share (before holding company discount of 20%) to DRB.
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DRB is likely to demand for higher valuation (vs HLIB’s) since Malaysia listed banks are traded at an average of 2.07x P/B, while Bank Islam is 1.58x.
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Maintain Buy with unchanged Target Price RM3.43
Source: Hong Leong Investment Bank Research - 17 August 2012
herbert456
This disposal of Bank Muamalat is not really a priority for DRBHICOM. In fact, there is always the excitement that DRBHICOM has a bank that it can cash out anytime.
Even if this negotiation fails, the keeping of 70% in bank muamalat is attractive enough to make DRBHICOM an investment choice.
2012-08-23 08:58