KUALA LUMPUR: RHB Investment Research maintained its buy call on BIMB Holdings Bhd
with a target price of RM4.50.
The research house said it believes the overhang on share price following capital-raising concerns is overdone.
"We examine the impact, assuming MYR728.4m is raised via rights issue as part of the restructuring exercise. Our back-of-envelope calculation suggests EPS dilution of only 3-5%, assuming rights issue shares are issued at 10-30% discount, while impact to fair value is negligible.
"We believe the current share price provides significant margin of safety for investors with minimum downside."
RHB noted that BIMB's plans to divest Syarikat Takaful Malaysia has been shelved for now.
"Assuming Syarikat Takaful remains a subsidiary under Bank Islam in the restructured entity, BIMB has the alternative to transfer the 60% stake to the latter at fair value.
We think management will unlikely pursue this route, given Syarikat Takaful’s current market capitalisation of MYR3.2bn. At a 60% stake, Bank Islam will have to fork out MYR1.9bn for the transfer of Syarikat Takaful."
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