AmWatch - RHB Capital : DRP price set at RM7.03 BUY, 16 Mar 2015

STOCK FOCUS OF THE DAY

RHB Capital : DRP price set at RM7.03      BUY

We maintain BUY on RHB Capital Bhd (RHB Cap), with an unchanged fair value of RM9.30/share. Our fair value is based on an ROE of 11.0% for FY15F, leading to a fair P/BV of 1.2x.  RHB Cap announced that the issue price of the new shares to be issued pursuant to the dividend reinvestment plan (DRP) has been fixed at RM7.03. The issue price is computed based on the volume weighted average market price (VWAP) for the five (5) market days (up to and including 12 March 2015) prior to the Price Fixing Date of RM7.86 minus the single-tier interim dividend per RHB Capital Share of 6 sen and applying a discount of approximately 10% or equivalent to approximately RM0.77 per RHB Capital Share.

The book closure date has been fixed for 27 March 2015. The new RHB Capital Shares arising from the DRP will be listed on the Main Market of Bursa on 27 April 2015. The latest discount of 10% is similar to the previous DRP (DRP price of RM7.44) for the final dividend of FY13. The subscription rate was 72.5% then. We have tweaked our earnings forecasts for the latest information and adjusted our assumptions of DRP price of RM6.50 to RM7.03, and subscription rate of 58% to 70%. Our ROE is unchanged at 11.0% for FY15F.

In terms of share price performance, we believe RHB Cap’s share price has likely been affected by press reports of selected large loans. Our assumption is these are likely to be government guaranteed. The stock is now trading at less than 1x forward P/BV for FY15x.

Others :

Kulim : Stretched valuations        SELL

 

QUICK TAKES

Puncak Niaga : Receives request for third extension        HOLD

Supermax Corporation : Expanding into contact lenses   HOLD

Plantation Sector : Newsflow for week 9-13 March          NEUTRAL

NEWS HIGHLIGHTS

Yinson Holdings : No change in direction with Mokhzani