• According to media reports, Aabar Investments PJS is planning to sell down its remaining 9.99% stake (400.52mil shares) in RHB Bank at the price of around RM5.64/share with CIMB appointed to undertake the book-building exercise.

• This follows an earlier selling down of 4.76% (191mil) of its shares via private placement at between RM5.43 and RM5.54 in March 2019.

• We expect a temporary softening of its share price with this news.

• It is not surprising that the shareholder, Aabar, is gradually exiting the banking entity.

• Aabar is considered to be a passive investor, and the full disposal of its remaining 9.99% stake should improve the liquidity of RHB Bank shares. The free float on the stock is expected to be higher from the present 39.3% after the completion of the disposal of the shares. This will remove uncertainties overhanging on the remaining shareholdings of Aabar in RHB Bank.

• We maintain our BUY call based on improved fundamentals underpinned by better asset quality. Our FV is unchanged at RM6.60/share based on 1.0x FY20 P/BV. Valuation remains undemanding with the stock trading at 0.9x BV/share.

Source: AmInvest Research - 18 Jun 2019