Public Bank (PBK MK)
BUY (maintain) Price Target: RM5.36
Up/Downside: +17.3% Previous Target (Rating): RM5.20 (BUY)
In the grand scheme of things
➢ Public Bank (PBB) announced a related-party acquisition of an effective stake of 44.15% interest in LPI Capital (BUY, Price Target RM15.00) held under the Estate of the late Tan Sri Dato’ Sri Teh Hong Piow (TST) for RM1.72bn cash (at RM9.80/share)
➢ The management of PBB nonetheless, intends to keep the listing status of LPI, though inevitably, PBB will have to extend a Mandatory General Offer (MGO) to acquire the remaining 55.85% shares not held in LPI at RM9.80/share, once the initial 44.15% interest acquisition is completed
➢ We are confident that the minorities of LPI would not accept the offer price. As such, the capital which PBB may need to fork out for the acquisition is limited to c. RM1.72bn and unlikely to be detrimental to PBB’s CET1 ratio (at the Group and Bank level). Reiterate BUY, our PT is revised to RM5.36 (from RM5.20)
Source: Affin Hwang