Verdict: Entrant of SAH is expected to be a positive boost for Affin in the long run. However, fundamental issues and overvaluation may beset in the short term
Yays
Nays
OKs
Entrant of a new largest shareholder. Sarawak Government via its wholly owned subsidiary company, SG Assetfin Holdings Sdn Bhd ('SAH') has concluded the share purchase agreement (SPA) of Affin Bank Bhd shares owned by Lembaga Tabung Angkatan Tentera (LTAT) and Boustead Holdings Berhad, thereby becoming the largest shareholder with an approximately 31% stake. Prior to the acquisition, the Sarawak Government held a 4.81% stake.
From a fundamental perspective, the potential new shareholder is in line with Affin's current direction. We think it provides Affin with increased Investment Banking (IB) opportunities (enhancing its NOII potential and filling in from the AHAM disposal). It also provides Affin opportunities to build up its SME and corporate segments, especially when the Group is looking to move away from lower-yielding consumer loan segments.
More of a longer-term play - important not to overstate the benefits brought about by these changes. We believe that Affin is still overvalued at current juncture, given the multiple headwinds it faces in the near future. We feel that benefits brought about by a new shareholder will take some time to manifest.
Source: MIDF Research - 30 Sep 2024
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