In the past, the dividend reinvestment (i.e. dividend is paid via issuance of new shares instead of cash) has always be at about 10% discount on the average closing price.
So let's say you are entitled to dividend of RM100. So if you opt for cash dividend, you get RM100 cash.
Let's assume the average closing price of the shares for the past 5 trading days is RM2, then apply 10% discount. That gives you a share price of RM1.80 per share. So if you go for the dividend reinvestment, you will get RM100/RM1.80 in shares, i.e. approx 55 shares. So if the share price remains at RM2, then you can sell the 55 shares for RM110!
Why do banks (e.g. Maybank etc) do this? Simple reason... they need capital for their lending business. So if they pay out cash, there is less capital for them to lend.
If Affin can maintain 2021 PBT of about RM700 mil going forward, and assuming P/E ratio of 10 (most other banks about this size has PE ratio of about 10-14), that would give a rough valuation of RM7b. So price per share should be around RM3.29
@aklobi, initially price was below RM2 due to LTAT's daily selling. After the selling ceased, price climbed up above RM2. Then EPF started selling daily. Once EPF cease selling, price will climb to RN2.50.
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....