- We maintain HOLD on Malayan Banking Bhd (Maybank) with a marginally lower fair value of RM8.40/share (from RM8.50/share). This is based on revised ROE of 11.4% (from 11.5%) for FY16F. This leads to an unchanged fair P/BV of 1.3x.

- Maybank has announced that the issue price of the new Maybank shares to be issued pursuant to the 11th dividend reinvestment plan (DRP) applicable to the interim cash dividend has been fixed on 25 September 2015 (Price-Fixing Date) at RM7.50 per new Maybank share.

- This is in relation to its earlier declared interim taxexempt net dividend of 24.0 sen. The DRP will apply to the electable portion, which had been determined at 20 sen and the remaining amount of 4 sen to be paid in cash.

- The RM7.50 issue price for the 11th DRP is based on the five (5)-day volume weighted average market price (VWAMP) of RM8.53 per Maybank share up to and including 23 September 2015, being the last trading day prior to the Price-Fixing Date for the issue price of new Maybank Shares after adjusting for the following: (i) a dividend adjustment of RM0.24 to the five (5)-day VWAMP (Ex-Dividend VWAMP); and (ii) a discount of RM0.79 which is approximately 9.53% discount to the to the Ex- Dividend VWAMP of RM8.29.

- Notably the DRP issue price is being set at a wider discount of 9.53%, compared to circa 5% in recent DRP issues.

- The ex-date for the interim dividend is 8 October 2015.

- The book closure date has been fixed for 12 October 2015.

- Maybank also announced that, barring any unforeseen circumstances, the new Maybank Shares arising from the 11th DRP will be listed on the Main Market of Bursa Malaysia Securities Berhad on 12 November 2015.

- Our earnings model has been adjusted for the latest information, with the key changes being the lower issue price of RM7.50, compared to our earlier assumption of RM9.00. This leads to lower ROE of 11.4%, from 11.5% previously.

- We maintain HOLD.

Source: AmeSecurities Research - 28 Sep 2015