post merger, cimb share holders own 70% of new entity, rhb share holders own 30%. that means osk would roughly own 3% of the new entity? no longer substantial share holder.. maybe no board seat as well? could this be a negative impact?
There is a reality that says: There is no gain without a pain, this is for sure. But can everyone in this country bear the blunt of the painful process of transforming, and why should they?. I see this merger as a power "enlarging" process. For the 3 banks that want to merge they gain some and lose some. But for the Malaysian public, it is more pain and more risk than ever. In the short term and long term: In the long term, company wise nobody can tell, even its own impact on the Malaysia banking sector where it is going to make the smallar bank more difficult to survive (banking merger depends on current condition and situation). You merge and create a multi-big bank while the country's borrowers are already in vey big debts like 87%, where are you going to increase revenue and profitability (where the population are not growing). Of course, the merger is a "making progress" is a theory but will create pain for the Malaysia public in the short term and long term (No pain no Gain). For shareholders, there will be winners and loses. The only winner is MBSB because it is the worst stock and still could fetch RM$2.82 or what. But shareholders of CIMB and RHB are losers. The value of CIMB shares got diluted by 30% but poor rhb shareholders will see their shares devalue by 70%. In conclusion, MBSB is biggest winner, RHB is biggest losers, CIMB win some and lose some (not so bad). For the other Malaysian banks they are losers if they don't work harder than now, and the Malaysian public is losers because now they have a bigger bank they have the biggest risk on them. Everything is business for people, that is why we should do something for ourselves by not supporting this process because it is bad for us. Is it going to benefit all of us when we have a very powerful bank in the mist of others? Don't we need to care for the others also and not just ourselves only? You will learn very soon that everything is in fact a theory until everyone is happy or well taken care of . Let them hear our voices if we are not happy, because everything is a business for everyone.
Posted by AhMoi > Oct 10, 2014 08:30 AM | Report Abuse X
Be careful market has never accorded RHB that kind of valuation ie 10+
It is an internal valuation for the merger purpose.... ask yourself if the value/market price of the new bank can ever reach the value now given under the merger exercise? ???
Posted by AhMoi > Oct 10, 2014 09:16 AM | Report Abuse X
Say, A's market value as accorded by the market all this while is 300k, B's 100k
Now they want to merge and value themselves, themselves. .. oh.... A is worth 500k, B is worth 250k
And, they set up a new co C... ask yourself will the market value of C be suddenly 750k???? 350k more over 400k just like that...
EPF is a winner also because it holds majority of the shares in MBSB. What about minority shareholders of rhb, they (rugi). I hope OLH can cut a deal with EPF to sell back his shares at the current market price of RM$8.70. The is no need to sell out osk shares. It always is a good thing to wait and see what happens later on.
OSK is falling because of market sentiment, its blood everywhere lah...
Also, OSK is not valued as much because OLH is not saying what he would do with the merged CIMB-RHB shares. If he were to offer statement saying all RHB shares will be distribute to all shareholders, it will rise above 2.70. Given RHB share price, OSK's investment in RHB is worth 2.35 per share already.
How much will the merged CIMB-RHB worth depends on how well the two integrate, for that, only time will tell.
look at the big roadblock to throw at 2.21...it is a trap if you buy OSK now...KLSE already down 16 points ...next week will drop further when down jones tonite drop another round..
RHB (up 19 sen); OSK (down 7 sen). Does not make any sense. Either OSK is overpriced or someone is pushing it down. OLH has to tell us what he is doing to RHB shares; since he may be no more in the Board of CIMB-RHB.
What’s New CIMB-RHB-MBSB has announced details of their merger which entails taking MBSB private at MYR2.82/sh, and merging CIMB and RHB via a share swap of 1.38 CIMB shares for every 1 RHB share.
What’s Our View
The outright winner, is MBSB (MBS MK; Not Rated, FV: MYR2.82), which is to be taken private at MYR2.82/sh. Investors will have an option of cash or RCPS in a new unlisted mega-Islamic bank, which would likely be palatable only to strategic shareholders.
The deal is neutral on CIMB, whereby we estimate a post-merger dilution in FY15 ROE to 11.4% from 12.3%. Pegging on a lower FY15 P/BV target of 1.35x (FY14 1.7x previously) results in an unchanged TP of MYR7.60, which translates to a FY15 PER of 12.2x, in line with Maybank. We maintain our HOLD call on CIMB.
Valuing CIMB at MYR7.60/sh and taking into account the 1.38 swap ratio, RHB would be valued at MYR10.45 (+20% upside). Our TP is raised to MRY10.45, and we upgrade RHB to BUY from HOLD.
OSK (OSK MK; Not Rated) could eventually hold just 3% in the enlarged entity and we think it would make commercial sense to dispose off this shareholding. On revaluing its stake and applying a 20% discount to its RNAV, we derive a FV of MYR2.64 (+15% upside).
Key risks at this juncture would be (i) regulatory approvals, (ii) EPF’s right to vote on this deal and (iii) Aabar’s acceptance.
if EPF can't vote. Then OSK's vote become significant? right? then OLH may make a deal out of it.. and dispose off all the RHB holding after the merger. Because 3% in the enlarge entity didn't make good commercial sense as written above.
With the disposal, OSK will have $$ for the PJD-OSKprop merger?
Part I: Cimb and Rhb merging. Instead of giving Rhb a valuation of 12, it has been given a middle of the road valuation of 10 but Cimb has been valued at the lower end ( 7.27 ). Cimb exchange rate for the new entity was not favorable, it was better to hold Rhb shares for the exchange. A higher goodwill valuation was not accorded to Cimb. This was to please Aabar and to simplify the merging process otherwise goodwill valuation have to be given to the 3 banks which will complicate things further. It is like CokeCola merging with Yeo ( no offend to Yeo ), the bigger company should command a higher goodwill valuation. Part II: Mbsb given the choice of being takenover ( cash out ) or merging with mega Islamic Bank. A higher valuation was given to Mbsb as in a takeover. Reasons why Osk retreated: 1: profit taking. 2: Dowjones fell, klse sea of red. 3: funds pulling out of M'sia. 4: investors impatient, cannot wait. 5: those who want to keep the share price down. 6: day traders taking advantage of the situation. 7: those who think Osk holding in Rhb has been diluted from 9.91% to 3%. 9.91% x Rhb 25.8b = 2.556b 3% x ( Rhb 25.8 + Cimb 60.58 ) = 2.591b Therefore no dilution. Market cap. taken from the star newspaper. 8: risk of not being approved by Bank Negara. Very, very slim chance of this happening as B Negara would not have given permission for the 90 days negotiation. Very disruptive to share price if BN were to allow it in the first place. 9: EPF to vote or not. Not an issue any more as EPF voting is now to speed up and shorten the merging process. 10: objection by Aabar. It has been given the opportunity to invest in the mega Islamic Bank and more over Cimb has been given a lower exchange rate for the new entity and Rhb has a value higher than the market value. All the risks being greatly reduced. Kudamuda, good thinking. Osk movie Part I : PJD + Osk prop will materialize soon. Part II: Coming soon. Osk have no choice but to diversify, no ifs, to drive the company forward. Ong told you PJD + Osk prop merging to gain status of being first tier developer, with 3b in turnover per annum. He has to do the same to Osk holding, he is not blind to this. End result mini Mega OSK created. Ong only needs to sell half of the new entity as PJD 800m + Osk prop 244m = 1,044m Hopefully he will give you the other half. If he use the other half for projects in the mini Mega Osk, profit will soar and so will the share price. Hope you enjoy reading this.
Gheekong, glad to 'hear' from you after a long silence. Enjoy your 'analytical' write-up. Thanks. I am hopeful OSK will rise; but the 'red sea' is swarming around us. Otherwise BOH CHOW SEE AAAAHHH!!!!!!!
At RM2.14, the price is sweet and respectable to OLH. Now, you see what I meant. RM2.80 less RM2.14 gives one a respectable profit. BOH CHOW LAK KOH AHHHHH!!!!!!!!
I fear the worst. Acquiring your own companies? Is this respectable? The only person getting rich is the person selling and buying his own companies. Not at this time; not at this time. Properties are having a bad time.
Hi, damagpie. OSK may adopt the method of the EPF style merger. OSK PROP issues shares to OSK (at agreed ratios) for a first tier property giant; and then buy over PJD to form a company to build PR1MA houses. (Just my dream.)
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Posted by JXRepcoBuffet > 2014-10-09 22:41 | Report Abuse
OSK will gap up another 10% by tomorrow....