Monday, December 21, 2009

What's Up With AFG



For those who tracks the market closely, they would have noticed the surreptitious uptrend in AFG. However, when you pick up most of the research on the stock, its usually a Neutral rating or Under perform tag on it. Hence it is likely to bought up NOT on fundamentals alone. It is one of the ten anchor banks, but also the smallest one. It is obvious that Bank Negara still wants more consolidation and it would not surprise me if there are only 7 banks left standing by end of 2010.

Back to AFG, its main stake is held by Temasek and there have been word that Bank Negara does not want a sovereign wealth fund to hold a banking stake. Apparently moves are in place to switch the stake to DBS Bank. DBS Bank is the last of the 3 main Singapore banks without a proper "exposure" in Malaysia. In one fell swoop, DBS Bank could have about 80 branches. The good thing about having DBS Bank is that there will be a more decisive way to manage the bank, either via capital injections or acquisitions. In fact, if DBS Bank gets in directly, you can be sure that they will pick up even more shares from the open market. Upside is there because its still below 2.0x PB value as it was considered to be a smallish bank in Malaysia, its who persona changes if DBS Bank was to emerge.

It would be thought to be difficult to allow DBS Bank into Malaysia but I think there are already like-minded high powered people who think its better to open up both ends. If one were to visit Singapore, you will find CIMB preparing itself to up the ante in Singapore. Things are opening up and its good for both sides.

p/s photo: Meisa Kuroki

2 comments:

Chew said...

Hi Mr Dali,

Kindly offer your comments on this ACE stock called Opcom which I have bought and have been following since the announcement of the award of RM 359 million HSBB contract from Telekom. The turnover and earnings for next FY 31/3/10 will be at least doubled. The company declared dividends of 1.5 sen each time for 4times this calendar year. Divendends were declared 3 times last year. The company is elegible for migration to the Main Market. However, the stock is illiquid and the price remains low. Why is nobody interested? Should I continue to buy or sell ? Thank you for your views. Sincerely GS Chew.

Salvatore_Dali said...

chew,
havent been following opcom... will write when i get to it