• Share prices slumped to YTD low of RM4.27 after proposed RHBBANK-AMBANK merger talks ceased. AMBank’s share price rose to 52-week high of RM5.56 (3 May) amid rumours of merger talks between RHBBANK and AMBANK to create the 4 th largest banking group in Malaysia if materialized. However, share prices slid to a low of RM4.27 (5 Sep) before closing at RM4.35 yesterday following the termination of RHBBANK-AMBANK merger negotiation as both parties were unable to reach conclusion over various terms, among others pricing and synergies.

• HLIB institutional research has a BUY rating with a TP of RM5.20, a 19.5% upside. Despite the scrapped merger deal, we see AMBANK continues riding on business recovery and will pursue organically its Top 4 aspiration by 2020. After the recent selldown, AMBANK is currently trading at steep discount of 0.8 P/BV, 41% lower as compared to peers’ P/B of 1.36x. On P/E basis, AMBANK’s FY18 P/E of 9.5x is also trading at 21% discount against its peers’ 12x.

• Poised for further rebound amid signs of bottoming up. Overall, we see limited downside risks for AMBANK in the short term, supported by undemanding valuations, bottoming up technical readings and strong DY of 5.2% projected for FY18-20.

• Following the successful reclaim above 10-d SMA (at RM4.31), the stock is likely to advance further towards RM4.47 (20-d SMA) and long term resistance at 200-d SMA near RM4.65 levels. A decisive breakout above RM4.65 will spur prices higher to long term objective at RM4.82 (30-w SMA). On the flip side, key supports are RM 4.26 and RM4.15 (daily lower Bollinger band). Cut loss at RM4.13.

Source: Hong Leong Investment Bank Research - 14 Sept 2017