Journey to Wealth
Malayan Banking - DRP plan likely to continue
- We are maintaining BUY on Malayan Banking Bhd (Maybank), with an unchanged fair value of RM9.80/share. This is based on an ROE of 14.8% FY12F, which translates into a fair P/BV of 2.1x.
- Maybank had earlier announced that the subscription rate for its latest dividend reinvestment plan (DRP) is 88.5%.This was in line with the previous tranche's take-up rate of 86.1%.
- Recall that the final GDPS of RM0.36 comprises an electable portion of RM0.32 (net DPS basis is RM0.24), which can be elected to be reinvested in new ordinary shares in accordance with Maybank's DRP. The remaining portion of GDPS of RM0.04 (RM0.03 net of taxation) will be paid in cash. The DRP price was earlier set at RM8.00.
- The subscription rate of 88.5% was in line with our forecast of a 90% subscription rate.
- The new shares issued numbered 202.9mil, which increased the share base by 2.6% to 7,842.3mil from 7,639.4mil.
- We have fine-tuned our forecasts, based on confirmation of new shares to be issued, but our ROE forecast is relatively unchanged at 14.8% FY12F.
- Assuming there was no DRP plan for this tranche of final dividend, we estimate ROE would have been 15.1%. Further, our forecast book value would be lower at RM4.59/share FY12F instead of the current RM4.67/share, given that the equity base would not be affected by new share issue.
- But, if assuming no DRP plan for this tranche of dividend, our fair value would be upgraded marginally to RM10.00/share from RM9.80/share. This is because of the theoretically higher ROE, leading to a higher P/BV fair value rating of 2.2x instead of 2.1x, which offsets the effect of lower book value.
- Looking ahead, the company still has a large Section 108 tax credit remaining of RM1.9bil, which will have to be utilised by December 2013. This means that Maybank will have to pay up to RM0.99 in GDPS in order to fully utilise the section 108 tax credit. Thus, we expect Maybank to continue with the DRP plan.
- We maintain BUY. We believe key rerating catalysts from hereon are:- (a) improvement in asset quality, which will provide comfort that loan loss provisioning will likely be lower (b) better-than-expected ROE; and (c) better-thanexpected dividend.
Source: AmeSecurities
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
Market Buzz
2024-11-05
MAYBANK2024-11-04
MAYBANK2024-11-04
MAYBANK2024-11-04
MAYBANK2024-11-04
MAYBANK2024-11-04
MAYBANK2024-11-04
MAYBANK
2024-11-01
MAYBANK2024-11-01
MAYBANK2024-11-01
MAYBANK2024-11-01
MAYBANK2024-11-01
MAYBANK2024-10-31
MAYBANK2024-10-30
MAYBANK2024-10-30
MAYBANK2024-10-30
MAYBANK2024-10-30
MAYBANK2024-10-29
MAYBANK2024-10-29
MAYBANK2024-10-29
MAYBANK2024-10-29
MAYBANK2024-10-28
MAYBANK2024-10-28
MAYBANK2024-10-25
MAYBANK2024-10-25
MAYBANKMore articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Introducing MY's First IPO Fund for Sophisticated Investors!
New Update. Discover investment communities that resonate with your ideas
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
MQ Trading Signals
Time
Signal
Duration
Type
2024-11-05 10:30:00
EMA 5
30 Mins
BUY
Apps
Top Articles
1
3
BFM Podcast
4
BFM Podcast
5
Stockhistory
7
BFM Podcast
8
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
