RHB Capital (RHBCap) announced that the ex-date of its 1-for-5 517.7m Renounceable Rights Issue (at RM4.82/rights share) has been set on 19 Nov15 while the entitlement date on 23 Nov15. The trading of the rights shares will commence on 24 Nov15 and cease trading on 1 Dec15. The allotment of the excess rights securities will be announced on 11 Dec15. Meanwhile, the rights shares will be listed on 21 Dec15. (Source: Bursa Malaysia)

Comments: Though the RHBCap Rights Issue price appear to be an undervalued entry into RHBCap at a 20% discount, we note that banking group continues to face headwinds arising from an expected NIM deterioration (due to increasing funding cost), weak loan growth as well as potentially rising credit costs. We still keep our SELL rating on the RHBCap, with our PT at RM6.00 (at 0.67x P/BV on a 2016E ROE of 8.3%). Under the reorganized RHB Bank, our PT is RM5.54 (based on 1x P/BV on 2016E BVPS).

Source: Affin Hwang Capital Research - 25 Sep 2015