Posted by icst1975 > 2023-06-12 11:36 | Report Abuse

Ten years ago, I bought Maybank shares at around RM10. Company's net profit growth was 2.37% p.a whilst the NOSH increased by 3.75% p.a. over the 10-year period. Maybank long term share price had drfited downwards at minus 1.18% pa to peak around RM8.8 recently prior to the most recent round of div ( RM0.25) . Maybank long term average share price can be estimated by the formula RM10*(100%-1.18%)^10 = RM8.8 , which was the high price before the recent RM0.25 dividend.

Posted by icst1975 > 2023-06-12 12:34 | Report Abuse

I also bought RHB shares at about RM6.8 ten years ago. RHB's long term profit growth is about 4.43% pa but the total shares had been growing at about 6% pa. Total shares had been increasing at faster rates than profit growth by 1.57% pa. RHB long term share price had drifted downwards most likely due to faster rate of increase increase in no. of shares resulting from mulltiple DRP's. Share price had droped from RM6.8 to peak of about RM5.8 just before the most recent round RM0.25 dividend. The drop in the long term share price can be estimated from the following formula. RM6.8*[100%- (6%-4.43%) ] = RM6.0* [ 100% - 1.57%]^10 = RM6.8* (98.43%^10) = RM5.8 which was the peak price before the most recent round of RM0.25 dividend.

Posted by icst1975 > 2023-06-12 12:40 | Report Abuse

Multiple rounds of DRIP which lead to a faster increase in the no. of shares as compared to Company's profit growth is surely very harmful to the Company's long term share price. It is most detrimental to small share holders who may not want to subsribe to the DRIP due to small odd lot DRIP shares allocated to them.

Posted by speakup > 2023-06-12 14:26 | Report Abuse

DRP is toxic. Wonder why banks love it?

Posted by icst1975 > 2023-06-12 14:47 | Report Abuse

The large shareholders (example, EPF, KWSP) and fund managers could have asked for DRP's as they are in a position to sell millons of shares at highs pre to x-dividend dates, subscribed to millions of DRIP shares at very substantial discount, sell millions of these shares even at lower price, like now for RHB shares at RM5.3 as they subscribed at RM4.74, pushing the price lower, and these large share holders would buy back millions of shares at lower price, and wait for the next round. The small fishes, who are more than 97% of the shareholders, are the ultimate losers if they don't know how to protect themselves.

Posted by icst1975 > 2023-06-12 14:58 | Report Abuse

HL Bank and PBB are not giving DRP. After adjusting for bonus shares,
their long term share price are on uptrends.


speakup: DRP is toxic. Wonder why banks love it?

Posted by OnTime > 2023-06-12 15:35 | Report Abuse

banks use drp to conserve cash

Posted by icst1975 > 2023-06-12 16:08 | Report Abuse

To be fair to all shareholders particularly the vast no of small shareholders (who makes up more than 97% of the shreholders) and who are thus very important for a dynamic market, Banks should just give lower dividends if they want to conserve cash.

Posted by observatory > 2023-06-12 16:20 | Report Abuse

DRP is not friendly to small investors considering the cost (RM10 stamp duty), odd lots, and most importantly the trouble (before the e-DRP days, where one must rush to post office after receiving the form very close to deadline).

So DRP ends up being a transfer of wealth from small investors to bigger ones, who enjoy up to 10% discount.

Looking at past 5 rounds of DRP by RHB, the DRP subscription rate run from 85.96% to 87.65%. So about 87% has taken advantage of the 13% who did not subscribe.

Based on the analysis of shareholding as of 28-Feb-2023 (Annual Report page 196), 96.42% of the shareholding is held by investors owning more than 100,000 shares.

Given the latest round of DRP subscription was 87.02%, it means even some of the reasonably well-off investors owning more than 100k did not subscribe. I’m sure majority of the smaller investors owning less than 100k just gave up and received cash dividends instead, thereby subsidizing substantial shareholders EPF, KWAP and OSK.

Posted by observatory > 2023-06-12 16:20 | Report Abuse

Shareholders can vote no to DRP during AGM.
But it is hard to succeed since the resolution is supported by the substantial shareholders.
In fact, the latest AGM outcome showed the DRP resolution was supported by more than 99.9% of the votes!
In terms of numbers, 1,723 shareholders voted in favor versus 201 against. Almost 9 to 1.
Some probably have voted yes despite not subscribing to the DRP and get diluted!

Posted by prudentinvestor > 2023-06-12 16:30 | Report Abuse

Selling pressure from some institutions gives us a golden opportunity to buy RHB Bank at a fire sale price of RM5.31. At RM5.31, RHB Bank is trading at a prospective PE of under 8 and a dividend yield of over 7.5%. No other counter listed on Bursa trades at such a low PE and high DY.

Posted by observatory > 2023-06-12 16:37 | Report Abuse

As mentioned before, if sharehodlers have to subscribe to DRP in order not to get diluted, the dividend yield is not 7.5%.
The effective dividend yield is (RM0.40 - RM0.10)/ RM5.31 = 5.6%

Posted by icst1975 > 2023-06-12 17:49 | Report Abuse

Sharehoders should voiced out to RHB management about the very detrimental impact of DRP on both the short term and long term negative effect on the share price and request that the bank should just declare a smaller dividend if Bank need to conserve more cash.

Posted by observatory > 2023-06-12 19:35 | Report Abuse

I agree DRP is not fair to retail investors.
However, to put it in perspective, the five rounds of DRP by RHB total about RM0.38. At 10% discount, the “loss” to retail shareholders who did not subscribe is not more than 4 sen per share.
From the long run perspective, DRP is like a zero-sum game (ignoring fees), transferring wealth from a group of shareholders to another group. The trading activities by funds before and after DRP did not affect long term share price.
Yes, DRP is dilutive on per share basis. So are the effects of right issue, share distribution and employee share grants.
But DRP has very minimal to no impact on total return basis (i.e. after adding up all the dividends and extra shares gained from DRP, share distribution etc).
There are other factors responsible for the long-term share price under performance (again, measured on total return basis, not per share basis).

Posted by stkoay > 2023-06-12 19:56 | Report Abuse

Wow.....RHB has shareholders who are very knowledgeable .....
....come buy Maybank.....is now giving less DRP and also the discount rate is very much lower than RHB and CIMB.... :)

....I have all 3...but different amount :)

Posted by observatory > 2023-06-12 20:54 | Report Abuse

Since the introduction of Basel 3, a few years after the Global Financial Crisis, banks everywhere are required to hold more capital to reduce the risk of bank bailouts.
European banks were badly hit (they also had other problems). But Malaysian banks are not immune.
The direct impact can be seen on the lower Return on Equity (ROE) over the last decade.

Posted by observatory > 2023-06-12 20:55 | Report Abuse

ROE = net profit to shareholders/ average shareholders’ equity. As regulators demand more capital, the equity (denominator) increases, lowering the ROE which is a measure of profitability.
As ROE declines, price to book multiple also declines. Lower P/B leads to lower share price.

Posted by observatory > 2023-06-12 20:57 | Report Abuse

In RHB case, net profit to shareholders (the numerator) has actually increased from RM1.8b 2012 to 2.7b in 2022. However, shareholders’ equity (the denominator) has increased even more, from RM15b in 2012 to RM29b in 2022. The result is ROE of 13.4% in 2012 has declined to 9.7% in 2022.
A ROE of 9.7% is below RHB's cost of equity. So the price to book ratio is less than 1 time (currently below 0.8X)

Posted by observatory > 2023-06-12 20:59 | Report Abuse

But RHB is not alone. In fact, Public Bank has also performed poorly over the last decade as compared to the previous decade.
Based to Public Bank annual reports, net return on equity has declined from 24.1% in 2012 to 12.8% in 2022. As a result, price to book multiple has declined from 3.2X to 1.7X.

However, over the same 10-year period, return on average assets is almost unchanged, which is 1.9% in 2012, versus 1.8% in 2022 (so is return on risk weighted assets). Decline in profitability is mostly due to reduced leverage.

Posted by observatory > 2023-06-12 21:02 | Report Abuse

The hope is this deleveraging process may come to an end. RHB CET-1 ratio has increased from 10.4% as of 2012 to 16.9% in 2022. Any further increase is unlikely.
So RHB has started to give back more dividends to shareholders (since it cannot invest the excess capital in a profitable way, by earning above its cost of equity)
So hopefully, barring any disaster in Malaysian economy, the next 10 years will be better.

Posted by unicornbird > 2023-06-13 08:04 | Report Abuse

obs, are people still paying Public bank high price, because they are stuck with the old idea that it has high ROE of 20% ?

Posted by unicornbird > 2023-06-13 08:05 | Report Abuse

PBB's recent performance is not better than Maybank & RHB, but people are paying a premium for it.

Posted by observatory > 2023-06-13 09:30 | Report Abuse

ROE and P/B relationship can reveal the extent of bank premium/discount.
Public Bank still enjoys the highest P/B multiple, as it's the leader in ROE, and also in key indicators like cost to income ratio, gross impairment loan ratio, loan loss coverage ratio.

Posted by prudentinvestor > 2023-06-13 11:31 | Report Abuse

Eight Malaysian companies have been ranked among the world's top 2000 strongest companies this year by Forbes. Maybank is ranked top in Malaysia, followed by Public Bank, Tenaga, CIMB, Petronas Chemicals, RHB Bank, Hong Leong Finance and Air Asia X.

Posted by serbatipu > 2023-06-15 00:21 | Report Abuse

Pls go back to 5.70

Posted by prudentinvestor > 2023-06-15 09:24 | Report Abuse

Yes, yes, yes. That is its rightful position, at above RM5.70 a share.

Posted by prudentinvestor > 2023-06-19 09:26 | Report Abuse

Continue to accumulate. Forbes could not have ranked RHB Bank as the 6th strongest company in Malaysia for no reason.

Posted by bingoman > 2023-06-19 09:31 | Report Abuse

buy pbbank or rhbbank which better?

Posted by prudentinvestor > 2023-06-19 15:45 | Report Abuse

If your sole purpose of buying share is to get dividends, buy RHB Bank.

Posted by unicornbird > 2023-06-19 17:48 | Report Abuse

prudent, ask people to sell. I want to buy cheap

Posted by prudentinvestor > 2023-06-19 20:15 | Report Abuse

Assuming that this year's earnings per share remains stagnant at 65 sen and dividend stays at 40 sen a share, RHB Bank is then trading at a PE of 8.23 and a dividend yield of 7.48. You can't find another counter listed on Bursa with such a low PE and high dividend yield.

Posted by lummy711 > 2023-06-20 12:56 | Report Abuse

for me I'm long term. only want dividend. so the important indicator is Yeild on Cost am I right? Assuming the company don't reduce dividend too much. I cannot keep up with share price.

Posted by prudentinvestor > 2023-06-20 15:22 | Report Abuse

Since you are a long term investor and you only want dividend, it is the right time to buy Maybank (dividend yield 6.7%) and RHB Bank (dividend yield 7.4%).

Posted by prudentinvestor > 2023-06-21 16:40 | Report Abuse

RHB Bank wins hands down for being the worst performing bank counter over the last few days.

Posted by OnTime > 2023-06-22 09:20 | Report Abuse

hope it'll play catchup

Posted by troy88 > 2023-06-22 09:33 | Report Abuse

please come down to 5.30 again. I haven't bought enough haha

Posted by prudentinvestor > 2023-06-22 11:48 | Report Abuse

Opportunity strikes but once. RHB Bank has gained little from its recent low, only 13 sen but CIMB has gone up by almost 50 sen.

Posted by cwc1981 > 2023-06-22 18:28 | Report Abuse

RHB going to merger with ambank?

Posted by cn21 > 2023-06-22 21:01 | Report Abuse

券商:时机已成熟 大马银行再引并购兴趣RHB going to merger with ambank?
https://www.enanyang.my/%E8%B4%A2%E7%BB%8F%E6%96%B0%E9%97%BB/%E5%88%B8%E5%95%86%E6%97%B6%E6%9C%BA%E5%B7%B2%E6%88%90%E7%86%9F-%E5%A4%A7%E9%A9%AC%E9%93%B6%E8%A1%8C%E5%86%8D%E5%BC%95%E5%B9%B6%E8%B4%AD%E5%85%B4%E8%B6%A3?fbclid=IwAR3LYo3KEl8P1bYaoRZu0fviBqWqzUsnlVHlZlAiGcQpwKoR4Tl3c73__4E

Posted by prudentinvestor > 2023-06-22 21:24 | Report Abuse

Merging with another bank is not attractive enough. Better to be taken over by a bigger bank like Maybank.

Posted by i3gambler > 2023-06-23 07:43 | Report Abuse

If Maybank were to take over RHB, not likely to have so much cash to pay for it, most probably pay by issueing new Maybank shares to RHB shareholders, so take over = merger in this case.

Posted by speakup > 2023-06-23 07:58 | Report Abuse

IMO, Maybank already undisputed #1 in Malaysia, very little incentive to buy Rhb.
On the contrary, Rhb buy Ambank makes sense, to get bigger!

Posted by lpalani49 > 2023-06-23 11:33 | Report Abuse

in the RHB take over AMBANK secenario, is it better to be RHB share holder or ABank? in terms of share capital appreciation

Posted by prudentinvestor > 2023-06-23 11:37 | Report Abuse

I don't think Maybank is content with being the #1 in Malaysia. UOB, the smallest of the three big Singapore banks, is still much bigger than Maybank.

Posted by stkoay > 2023-06-26 19:51 | Report Abuse

https://theedgemalaysia.com/node/672586

The research outfit’s top picks from the banking sector are RHB Bank Bhd (8.0% in FY2023) and Malayan Banking Bhd (7.1% in FY2023).

Posted by success2628 > 2023-06-27 16:04 |

Post removed.Why?

Posted by Value Investor Coo1eo > 2023-06-27 21:49 | Report Abuse

@success2628 is what I call a syndicate.

Posted by prudentinvestor > 2023-06-28 10:25 | Report Abuse

@success2628 KLCI won't break above 1,800 points any time soon, certainly not this year or next. RHB Bank's share price is still 30% higher than its lows reached in early Nov 2020, excluding dividends. Get your facts right please.

Posted by success2628 > 2023-07-02 09:53 | Report Abuse

Super Good news !
More & more companies rushing to be listed into KLSE !
There are 6 companies going to be listed in KLSE for July & early August 2023 ! 


1)Skyworld 10-7-2023 0.80

2)DC Healthcare 17-7-2023 0.25

3)MSTGOFT 20-7-2023 0.81

4)MYMBN 25-7-2023 0.21

5)Daythree 26-7-2023 0.30
6)KGW 1-8-2023 0.21

Posted by bingoman > 2023-07-06 14:22 | Report Abuse

every month also RM 5.40+-