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Alliance IB Research downgrades Affin to Neutral, trims target price

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Alliance IB Research downgrades Affin to Neutral, trims target price Empty Alliance IB Research downgrades Affin to Neutral, trims target price

Post by Cals Thu 23 Jan 2014, 09:34

Alliance IB Research downgrades Affin to Neutral, trims target price
Business & Markets 2014
Written by theedgemalaysia.com   
Thursday, 23 January 2014 08:37

KUALA LUMPUR (Jan 23): Alliance IB Research has downgraded Affin Holdings Bhd to  a Neutral at RM4.17 with a lower target price of RM4.57 (from RM4.82) after Affin revealed details of its proposed acquisition of Hwang-DBS’s selective assets with total consideration at RM1.36 billion.
In a note Thursday, Alliance IB Research vice president for equity Cheah King Yoong said while he was optimistic of the long term growth prospects of the enlarged entity going forward, he was concerned of immediate term earnings dilution as the group would be funding the acquisition almost entirely through equity by undertaking a rights issue to raise RM1.25 billion.
“Our computation shows that this could potentially dilute the group’s forward EPS by about 11%.
“In view of the potentially significant earnings dilution from its equity raising exercise, we have imputed a higher discount of 10% onto our valuation model. As such, we lower our target price to RM4.57 and downgrade Affin to Neutral,” he said.
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