Sunday, May 11, 2008

Manchester United


Manchester United
Premier League Champions
2007/2008

5 comments:

abby said...

refering to your previous post on RHBCAP book value...

Could you explain why u said im wrong on the calculation? I asked and double-checked and i think my way of calculation was right. Did you just pick up a report and take the figure (book value) without doing your own homework?

Salvatore_Dali said...

abby,

how silly of me, all the analysts must be wrong and you are right... esp since you did it yourself, you must be the right one... I am so sorry. Anyway below are the most recent research pieces, pls note their P/BV valuation, and go and show them how to calculate properly. (Aseambankers, Amsec, OSK). Apologies for not knowing how to calculate P/BV.


ASEAMBANKERS
RHB Capital
Withheld
New major shareholder from the Mid-East
TP: NA
Current Price: RM5.25
Abu Dhabi Commercial Bank (ADCB) has emerged as a new major
shareholder (25%), valuing RHB Cap at RM7.20 per share.
This should be positive for RHB Cap in growing its banking franchise
in the booming Gulf States.
No GO is triggered, but the deal has set a new benchmark price for
RHB Cap shares.
25% block at 2.2x P/B valuation.
ADCB has sealed an agreement to buy a
25% equity stake in RHB Cap from the Employees Provident Fund (EPF) for
RM3.876b (RM7.20 per share). The deal has been anticipated since last Dec
when it was reported that ADCB was willing to pay up to RM7.50 per RHB Cap
share. At RM7.20, this represents a hefty premium of 50% over the RM4.80
price tag that EPF paid last year to gain control of RHB Cap. The latest deal
also values RHB Cap on a P/B (2007) of 2.2x, quite similar valuations for the
20.2% block of EON Capital shares transacted early this year (2.1x).

OSK Research
RHB Capital
Target RM7.00
In Strategic Equity Partnership With ADCB

It was reported that The Employees Provident Fund of Malaysia (EPF) and Abu Dhabi Commercial
Bank (ADCB) has signed the sale and purchase (S&P) agreement to seal ADCB's acquisition of a 25%
equity stake in RHBCAP from EPF for RM3.9bn, or RM7.20/share, representing 2.2x FY07 PBV or 1.7x
FY08 PBV based on our forecast. With this deal, ADCB will become the 2
nd
largest shareholder and
EPF would still remain as the single largest shareholder (with declined shareholding of 57%).
COMMENTS

Our Take. The long-waited equity strategic tie-up with middle-eastern should be positive, in our view.
ADCB is a leading full-service commercial bank operating in the Gulf Cooperation Council (GCC) region
with strong footprints in retail, commercial, corporate and high net worth segments in United Arab
Emirates (UAE). With this new alliance, both RHBCAP and ADCB can now position themselves to
leverage on growing business flows between GCC and ASEAN as well as strengthen RHBCAP's
position as a global/regional Islamic banking player.

...meanwhile, it was also reported that EPF is in the midst of applying to BNM to own 40% of RHBCAP.
Recalled that EPF has been granted approval by BNM to hold 35% of RHBCAP that exceeds BAFIA's
stipulated limit of 20%. As such, we believe they may still need to further pare down their stakes in
RHBCAP by 17%-22% from the current shareholding level of 57%. This could also mean that RHBCAP
could probably see another strategic foreign shareholder that would possibly further value-add to the
Group's retail and SME segments. Interestingly, it was reported that a Japanese bank, Sumitomo Mitsui
Banking Corp, is interested to take up a 5%-stake in RHBCAP. Note that Sumitomo Mitsui is one of the
3 Japanese banks from which RHB Bank secured a RM320m loan in March 2008 to develop Malaysia's
SME segment.

Impact to Share Price. While we foresee the long-waited strategic tie-up with a middle-eastern party
could be positive to the share price performance in the short-run, we believe the share price could still
be traded below ADCB's purchase price of RM7.20/share, and possibly even below our target price of
RM7.00. Nonetheless, assuming a 25%-strategic holding premium, we still believe RHBCAP's share
price could trade up to RM5.75/share in the immediate term.

In the longer-term, we are optimistic over the Group's prospect, as the financials of the Group
are fast improving amidst decent top line growth. Coupled with this latest foreign strategic tie-
up that should be value accretive for RHBCAP (especially in the area of Islamic Banking), we
maintain our forecast and target price of RM7.00 for now.

Arab Research
RHB CAPITAL
ADCB pays 2.2x BV for 25% stake
BUY
RM5.25
Target Price: RM7.00
Rationale for report : Company update
FINANCE
Fiona Leong
fiona-leong@ambg.com.my
603 2036 2293
YE to Dec
FY07
FY08F
FY09F
FY10F
EPS (sen)
35.8
47.2 53.1 60.0
PE (x)
14.6
11.1 9.9 8.8
Source : AmResearch
(RHBC MK, RHBC.KL)
9 May 2008
The Employees Provident Fund Board ("EPF") has signed an agreement to divest a
25% equity interest in RHB Capital Bhd ("RHB Cap") to Abu Dhabi Commercial
Bank ("ADCB") for RM3,876m cash.
Consideration paid by ADCB values RHB Cap at 2.2x its book value per share of
RM3.27 as at 31 December 2007. This is similar to the 2.1x P/BV (Dec 2007:
RM4.52/share) Primus Pacific Partners Ltd will be paying for a 20.2% stake in EON
Capital. There were no surprises in the actual announcement of the deal, with
acquisition price within market expectations.
In evaluating its investment in RHB Cap, ADCB used a ROE benchmark of up to
25% return on equity in three years. Saeed believes this target is achievable given
RHB Cap's transformation plan.
As mentioned in our report yesterday, ADCB is interested in RHB Cap's capabilities
in Islamic banking. ADCB chairman Saeed Mubarak Rashid Al Hajeri said "we
have all these businesses lined up to be captured by both ADCB and RHB Capital.
We can syndicate huge sukuk loans which today in the UAE market are captured by
people like Barclays."
According to recent reports, the United Arab Emirates (UAE) accounts for 37% of
the total US$2 trillion (RM6.3 trillion) worth of potential investment in the Gulf
region's construction, oil and gas, petrochemicals, power and water and waste
sectors.
EPF chief executive officer Datuk Azlan Zainol also confirmed that Japan's
Sumitomo Mitsui Banking Corp, a unit of Sumitomo Mitsui Financial Group Inc, is
still in the running for a 5% stake in RHB Cap.
No change in our Buy rating and Gordon Growth-derived target price of RM7.00,
which pegs the stock at 1.9x its FY08F BV of RM3.59/share. At RM5.20, RHB Cap
is trading at 1.5x its BV while PERs are a low 11.1x FY08F earnings and 9.9x FY09F.
The 38.5% premium paid by ADBC may provide some boost to RHB Cap share
price.

abby said...

you are not helping at all... im a beginner in finance and i merely wanna get the BV right, not provoking a fight. I know many research companies gave the same BV (~2.2) but im just confused, should we include or exclude the intangible asset? if i include the intangible asset, the BV will match their reported BV. Kindly advise. Thanks.

Salvatore_Dali said...

abby,

i will do this once... first u questioned an acctg item ... i checked and told u were wrong ... u replied with a sacarstic "did u just pick up a report..."

since u gave me a shot, its courtesy to shoot back ... now u say I am not helping... hello, this is not an acctg class ... if ppl ask me one question a day on how these figures were arrived at, I have to spend 1 hour just to look up the annual report n report back to each one of you per question... this is a blog, not LCCI study lab. I have to take a lot of numbers on its own, if I question all analyst reports and figures, where I got time to do anything else.

You are right in that intangibles have to be subtracted to arrive at BV. Its probably because you are using 2006 annual report and not 2007 annual report.

I am not here to teach acctg... ok, water under the bridge.

abby said...

ok. i admit i used the wrong word. that's not wut i meant. my apologies... Thanks for your lesson and keep up the good work. cheers.