Monday, December 13, 2010

What's Up With BIMB

This stock again is not followed by any research house. So, why is it appearing in the top gainers and volume list, are investors trading blind again? Probably not, BIMB is not a syndicate stock. In case readers do not know, this is Bank Islam.

If you do some perfunctory research on your own you will find that the company made a net profit of RM257.4m or an EPS 12.7 sen. Nothing wrong with that at all. In light of the evolving landscape for banks, it is unlikely Bank Islam will be "allowed" to survive on its own.

Naturally the market will have its whispers when a stock is moving, that the stock will be acquired in an all cash deal. While most banking stocks are trading at 1.8x-2.2x book, BIMB has a NTA of RM1.31. You can say the stock is grossly undervalued even with its limited reach. The next thing to consider is who would be "suitable" to buy BIMB. No need to look around, only Maybank is on the list. While this might not make a significant impact on Maybank, it will on BIMB.

Besides size and scalability, it is only via M&A that BIMB could realise and unlock value for their long standing shareholders. How else to justify trading at 1.05x book value??? It makes strategic sense in light of the evolving banking landscape. Timing is pretty right too.

If you look at their shareholders list, there are not your usual GLCs among the usual ones (issued shares 1.066bn):
LTH 51.47%
Skim Amanah Saham Bumiputra 14.44%
PNB 5.81%
EPF 4.73%
LTAT 3.9%
Felda 2.34%
Majlis Agama Islam Terengganu 0.98%
Majlis Ugama Islam Sabah 1.83%
Amin Baitumal Johor 0.78%



If there is a deal, the EON Bank deal is just around 1.4x even though the market is saying the BIMB is going to be done at 1.8x-2.0x. This prices BIMB at RM1.83 at the low end or RM2.35 using 1.8x book. One can understand why the deal could be priced in the higher end, owing the make up of the shareholders. Again, caveat here is IF there is a deal.

If we can agree that BIMB would not be part of a syndicate play, then the substantive jump in volume traded would take on a different light. Again, I do not need to reiterate the reasons why there are so many M&A supposed activity, given the likelihood of changes to M&A rules next year. You make the call.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

9 comments:

Buyer said...

Too MANY GOOD stock....TOO LITTLE money to invest in! at least for the poor guy here!! :-(

k said...

good call on BIMB, dude. bgt in after lunch.
thanx!

newbie said...

You amazed me,Dali.Another great call from you.Keep it up!!

WK said...

i wonder what dont u like about TDM Bhd....?

Polite Market said...

Hi,
You said in your MBMR article that .....Cheapness is never enough to lure me in. It has to be catalyst, catalyst and catalyst.

What is the catalyst for KSL that it may move up to RM2.60 within 3 months?

Thanks for sharing.

Ivan said...

If maybank wanna makan BIMB.. haha ..wondering will it good for both company?

as i know maybank are looking to dispose their indonesia bank... looking for a big guy buyer now. .anyone?

Dreamer said...

tyh

Dreamer said...

It's going up~

zamans98 said...

Err,

BIMB is purely Islamic Bank, where as Meybeng is mix.

No way the shareholders will allow such merger move.

Islamic banking merger is not a MUST.