Asian Business Issues - Rants & Raves, Illusions & Collusions etc.
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?
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.ASEAMBANKERSRHB CapitalWithheldNew major shareholder from the Mid-EastTP: NACurrent Price: RM5.25Abu Dhabi Commercial Bank (ADCB) has emerged as a new majorshareholder (25%), valuing RHB Cap at RM7.20 per share.This should be positive for RHB Cap in growing its banking franchisein the booming Gulf States.No GO is triggered, but the deal has set a new benchmark price forRHB Cap shares.25% block at 2.2x P/B valuation.ADCB has sealed an agreement to buy a25% equity stake in RHB Cap from the Employees Provident Fund (EPF) forRM3.876b (RM7.20 per share). The deal has been anticipated since last Decwhen it was reported that ADCB was willing to pay up to RM7.50 per RHB Capshare. At RM7.20, this represents a hefty premium of 50% over the RM4.80price tag that EPF paid last year to gain control of RHB Cap. The latest dealalso values RHB Cap on a P/B (2007) of 2.2x, quite similar valuations for the20.2% block of EON Capital shares transacted early this year (2.1x). OSK ResearchRHB CapitalTarget RM7.00In Strategic Equity Partnership With ADCBIt was reported that The Employees Provident Fund of Malaysia (EPF) and Abu Dhabi CommercialBank (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 1.7xFY08 PBV based on our forecast. With this deal, ADCB will become the 2ndlargest shareholder andEPF would still remain as the single largest shareholder (with declined shareholding of 57%).COMMENTSOur 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) regionwith strong footprints in retail, commercial, corporate and high net worth segments in United ArabEmirates (UAE). With this new alliance, both RHBCAP and ADCB can now position themselves toleverage on growing business flows between GCC and ASEAN as well as strengthen RHBCAP'sposition 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'sstipulated limit of 20%. As such, we believe they may still need to further pare down their stakes inRHBCAP by 17%-22% from the current shareholding level of 57%. This could also mean that RHBCAPcould probably see another strategic foreign shareholder that would possibly further value-add to theGroup's retail and SME segments. Interestingly, it was reported that a Japanese bank, Sumitomo MitsuiBanking Corp, is interested to take up a 5%-stake in RHBCAP. Note that Sumitomo Mitsui is one of the3 Japanese banks from which RHB Bank secured a RM320m loan in March 2008 to develop Malaysia'sSME segment.Impact to Share Price. While we foresee the long-waited strategic tie-up with a middle-eastern partycould be positive to the share price performance in the short-run, we believe the share price could stillbe traded below ADCB's purchase price of RM7.20/share, and possibly even below our target price ofRM7.00. Nonetheless, assuming a 25%-strategic holding premium, we still believe RHBCAP's shareprice 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 Groupare 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), wemaintain our forecast and target price of RM7.00 for now. Arab ResearchRHB CAPITALADCB pays 2.2x BV for 25% stakeBUYRM5.25Target Price: RM7.00Rationale for report : Company updateFINANCEFiona Leongfionafirstname.lastname@example.org 2036 2293YE to DecFY07FY08FFY09FFY10FEPS (sen)35.847.2 53.1 60.0PE (x)14.611.1 9.9 8.8Source : AmResearch(RHBC MK, RHBC.KL)9 May 2008The Employees Provident Fund Board ("EPF") has signed an agreement to divest a25% equity interest in RHB Capital Bhd ("RHB Cap") to Abu Dhabi CommercialBank ("ADCB") for RM3,876m cash.Consideration paid by ADCB values RHB Cap at 2.2x its book value per share ofRM3.27 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 EONCapital. There were no surprises in the actual announcement of the deal, withacquisition price within market expectations.In evaluating its investment in RHB Cap, ADCB used a ROE benchmark of up to25% return on equity in three years. Saeed believes this target is achievable givenRHB Cap's transformation plan.As mentioned in our report yesterday, ADCB is interested in RHB Cap's capabilitiesin Islamic banking. ADCB chairman Saeed Mubarak Rashid Al Hajeri said "wehave 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 bypeople like Barclays."According to recent reports, the United Arab Emirates (UAE) accounts for 37% ofthe total US$2 trillion (RM6.3 trillion) worth of potential investment in the Gulfregion's construction, oil and gas, petrochemicals, power and water and wastesectors.EPF chief executive officer Datuk Azlan Zainol also confirmed that Japan'sSumitomo Mitsui Banking Corp, a unit of Sumitomo Mitsui Financial Group Inc, isstill 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 Capis 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 shareprice.
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.
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.
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.
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