KUALA LUMPUR (March 30): CGS-CIMB Analysis upgraded BIMB Holdings Bhd to ‘maintain’ at RM 4.36, with goal worth (TP) greater by RM 4.55 (from RM 3.47 ).

This follows the group’s inner group mission to generate important shareholder worth and switch its itemizing standing to its subsidiary Financial institution Islam Malaysia Bhd.

“Regardless of the potential dilution of EPS (earnings per share) ensuing from the position of shares, we’re shifting the BIMB from ‘scale back’ to ‘maintain’ as we consider Financial institution Islam would obtain greater valuations after resuming the itemizing standing of the BIMB.

“As well as, the BIMB might be one of many largest beneficiaries of any in a single day key charge (OPR) hike in 2022F (each 25 foundation factors [bps] improve may improve web revenue for the yr 22F [for the financial year ending Dec 31, 2022] roughly 6%). We favor Public Financial institution Bhd for publicity to the sector, ”analyst Winson Ng mentioned in a be aware yesterday.

CGS-CIMB famous that BIMB plans to undertake a non-public placement of recent shares to boost RM800 million to repay its sukuk as a part of the group.

“Based mostly on our simulation, we estimate that the fairness placement will dilute our projected EPS for BIMB from 4% to six% for fiscal years 21 to 23, based mostly on an assumed challenge worth of three, 87 RM (a ten% discount from the 4 RM BIMB worth. 30 March 22, 2021).

“The interior reorganization train additionally consists of the distribution of Financial institution Islam shares to BIMB shareholders on the premise of a 1: 1 ratio. Based mostly on the share worth of RM 4.30 for BIMB and RM 4.85 for Syarikat Takaful Malaysia Keluarga Bhd on March 22, 2021, we come to an estimated theoretical share worth of RM 3.11 for Financial institution Islam (after the position of BIMB shares).

“This interprets to a P / BV (e book worth) of 1.05 occasions based mostly on end-September 2020 BV / share. We contemplate this as enticing as decrease than the P / BV CY20 (calendar yr 2020) of 1.16 occasions for the banking sector on March 22, 2021, ”mentioned Ng.

The analysis home raised its FY21-FY22 EPS forecast by 6% -7% by reversing the 25 foundation level drop within the OPR (which didn’t materialize).

Relating to its sum of components valuation (SOP), CGS-CIMB has made a number of adjustments to its dividend discounting mannequin (DDM).

The adjustments eliminated the 15% discount in credit score threat from Covid-19, with the analysis home considering a 48% improve in provisioning for mortgage losses for fiscal yr 21, in addition to updating its model beta for Financial institution Islam from 1.1 to 0.95, tied with beta for BIMB.

On the time of writing, the BIMB had fallen eight sen or 1.83% to RM4.28, giving the group a market cap of RM7.93 billion.