- We maintain HOLD on Malaysia Building Society Bhd (MBSB), with an unchanged fully-diluted fair value of RM2.60/share. Our fair value is for ex-warrants and is based on an unchanged estimated adjusted (for warrants) FY13F ROE of 19.8%, leading to a fair P/BV of 2.0x.
- MBSB’s latest issued share base has now increased to 1,617.2mil as at 19 April 2013, from 1,615.7mil on 8 April 2013. This is due to more conversion of warrants and exercise of ESOS. We estimate the number of warrants remaining to be converted is now 137.4mil, down slightly from 139.4mil then.
- MBSB has also recently announced the ex-date for its final and special dividend, which is now fixed for 14 May 2013. The last date of lodgement is on 16 May 2013 and the date payable is on 30 May 2013. To recap, the final GDPS is RM0.09 (NDPS: RM0.0675) and special GDPS is RM0.18 (NDPS: RM0.135).
- MBSB had earlier alluded to, assuming full conversion of warrants and based on a fully-diluted share base, the section 108 tax credit outstanding would be fully utilised with this batch of final and special GDPS.
- We estimate that section 108 tax credit outstanding before this payment of final and special dividend at RM121mil.
- Based on the latest issued share base, we estimate the section 108 tax credit that may be utilised may amount to RM109mil. This is assuming there is no further increase in the issued share base from further warrant conversion and exercise of ESOS.
- Thus, the remaining section 108 tax credit would be RM11.5mil, based on our estimates, which is minimal. This is sufficient to support remaining franked GDPS of RM0.026 which may be declared in future, provided this is paid before end-December 2013.
- We like the company’s efforts to utilise as much as possible its section 108 tax credit and reward its shareholders, before the expiry of the section 108 tax credit by end-December 2013.
- MBSB’s share price has appreciated by circa RM0.10 recently. This is likely due to announcement of ex-date and payment dates for its dividend.
- Meanwhile, we expect the company to be still planning a possible rights issue. The company has hinted of its plans to raise no less than RM3bil to RM4bil in the longer term to fund its growth.
Source: AmeSecurities
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