KUALA LUMPUR: Maybank Investment Bank Research is maintaining a buy call on BIMB Holdings and it sees positives from its restructuring exercise which is moving towards completion.
In its research note on Monday, it estimated a combined sum-of-parts value of RM4.75 (RM5 previously on updating parameters) post-restructuring, from one Bank Islam share and 0.24 Syarikat Takaful Malaysia Keluarga Bhd (STMB) shares for every one BIMB share held.
Maybank Research said BIMB’s restructuring is moving closer towards completion, having recently raised close to RM800mil from its private placement.
On May 7, an application to obtain the sanction of the High Court of Malaya for the scheme of arrangement (SOA) to pay warrant holders was filed.
“Once this is sorted out, what remains is the distribution-in-specie of BIMB’s stake in Bank Islam and STMB to BIMB shareholders on the basis of one Bank Islam share and 0.24 STMB share for every one BIMB share, by our estimates. Bank Islam will then assume BIMB’s listing status.
“The main positive of this restructuring exercise, in our view, is that it should allow for a proper re-rating of Bank Islam, which we think is undervalued, ” it said.
Maybank Research said the bank generated a net ROAE of 11.4% in FY19 and 9.4% in FY20 which is higher than the average of 10.2% and 7.0% for its conventional peers.
“We forecast an FY21E ROE of 10.3% for Bank Islam, against a peer average of 8.6%. Bank Islam’s CET1 ratio was a very comfortable 14.7% end-2020, higher than that of BIMB’s 13.0% and comparable to the industry average of 14.8%, ” it said.
“In valuing Bank Islam at a prospective FY22E PBV of 1.2 times and STMB at a historical end-Dec 2020 PBV of 2.0 times, we derive a post-restructuring combined value of RM4.75 for BIMB, which represents a 23% upside to its current share price of RM4.30.
“We estimate a combined (Bank Islam and STMB) FY21 DPS of 15 sen to shareholders post-restructuring, which would be similar to our current projection for BIMB, and is a decent dividend yield of 3.9%, ” Maybank Research said.