- We are maintaining our HOLD rating on Malayan Banking Bhd (Maybank), with an unchanged fair value of RM10.20/share. This is based on an ROE of 14.0% FY13F, which translates into a fair P/BV of 1.9x.

- Maybank has recently announced that the application for the listing and quotation of up to 288mil new ordinary shares of RM1.00 each in Maybank to be issued pursuant to the 6th Dividend Reinvestment Plan (DRP) on the Main Market had been submitted to Bursa Securities on 26 March 2013.

- This is now pending Bursa exchange’s approval. Following Bursa’s approval, we expect the next approval process to be from Bank Negara.

- Recall that this is for its final dividend of FY12, which was announced in February 2013. To recap, the final dividend comprises:- (a) GDPS of RM0.18 less 25% tax (NDPS of RM0.135), (b) single-tier dividend of RM0.15/share.

- The proposed gross dividend consists of a cash portion of RM0.04 single-tier dividend to be paid in cash and an electable portion of RM0.29 (net RM0.245), whereby the electable portion comprises:- (a) RM0.11 single-tier dividend; (b) RM0.18 franked dividend (net RM0.135).

- In previous historical DRP plans, the earliest ex-date was the final dividend for FP11, where the ex-date was on 26 April 2012 (see Table in following page). This was 64 days from the date of declaration of dividend. Assuming a similar timeline, we estimate that the earliest ex-date for this 6th DRP plan would be 26 April 2013.

- The latest was the FY11’s final dividend, whereby the exdate was 90 days from date of declaration of dividend. Assuming a similar timeline, we estimate that the exdate for this 6th DRP plan would then be 27 May 2013.

- We believe the ex-date for the 6th DRP is likely to fall within this timeframe, i.e. somewhere between the possibly earliest date of 26 April 2013 and possibly the latest on 27 May 2013.

- The historical subscription rate ranged between 86% and 91% (see table in following page). Maybank’s final dividend was above expectations with a total dividend payout ratio of 75%. We expect the main driver to share price to still be high dividends. We are maintaining our dividend payout ratio at 55.9% for FY13F, given therelatively low bank entity’s common equity ratio at 7.6%.

Source: AmeSecurities