AmBank issues five new call warrants (CIMB, PBBANK, AFG, AFFIN and DAYANG)

AmBank
(M) Berhad (AmBank) is issuing five new European style cash-settled
call warrants (CW) to meet investor demand for trading opportunities and
alternative investments for current market conditions over the ordinary
shares of Affin Holdings Berhad (Affin), Alliance Financial Group
Berhad (AFG), CIMB Group Holdings Berhad (CIMB), Public Bank Berhad
(PBBANK) and Dayang Enterprise Holdings Berhad (DAYANG).

The CWs will be listed on 12 May 2011 with tenures of approximately eleven months and issue size of up to 100 million each.

“For
AmBank’s upcoming tranche of warrants, the thematic focus is on the
banking sector as earnings season approaches for many of the domestic
banks.

With leading loan indicators showing a strong rebound for
March 2011 compared to the previous month, we are optimistic that the
encouraging loans growth will boost bank earnings moving forward. The
recent rate hike in Overnight Policy Rate (OPR) by 25 basis points is
also expected to benefit the banks as they increase base lending rates
(BLR) prior to adjusting deposit rates higher.
Therefore,
for this tranche we are issuing CWs on four banks namely CIMB, PBBANK,
AFFIN and AFG. Besides that, we are also issuing the first ever CW on
DAYANG, an active player in the oil & gas industry,” said Ms Ng Ee Fang, Director/Head, Equity
Derivatives, AmInvestment Bank Berhad.

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March
2011 was a good month for the banking industry as loans application
growth registered a strong rebound. For the month of March 2011, loan
applications grew 37.5 per cent year on year compared to the 17 per cent
year on year for February.

Loans approval were also up strongly at 44.7 per cent year on year after rising only 7.1 per cent year on year in February.

Regional
bank CIMB reported net earnings of RM877.6 million for 4QFY10 (ended 31
December) and total FY10 net earnings of RM3,520.8 million.

Its
Indonesian subsidiary PT Bank CIMB Niaga reported somewhat flattish
earnings while Thai subsidiary CIMB Thai Bank reported a quarterly
turnaround to a net profit of THB282 million in March 2011, from a loss
of THB65 million in the previous
quarter.

AmBank’s CW on CIMB is priced at 15 sen with a gearing of 5.47 times.

As
for AFFIN, it expects to complete the acquisition of Indonesia’s PT
Bank Ina Perdana by the second quarter of this year. AFFIN is looking to
tap the burgeoning Islamic banking sector in Indonesia through PT Bank
Ina Perdana,
which is considered a medium-sized bank with 25 branches nationwide.

Besides
Indonesia, AFFIN is also looking at China as it works together with
Bank East Asia Ltd, which holds a substantial stake in AFFIN, to
identify potential business opportunities, especially in Islamic
banking.

AmBank’s CW on AFFIN is priced at 15 sen with a gearing of 5.85 times.

For
AFG, the bank’s focus has been mainly in the smaller, underserved SMEs.
AFG registered good growth numbers in this particular market segment as
evidenced by its 3QFY11 (ended Dec 31, 2010) figures which grew 11.6
per cent y-o-y.

Moving forward, AFG also sees good growth
opportunities in the non-interest income segment such as wealth
management, bancassurance, transactional banking, treasury and
investment banking, AmBank’s CW on AFG is priced at 15 sen with a
gearing of
5.15 times.

For PBBANK, the bank’s loan growth
continues to be driven by the consumer segment. Residential mortgages,
which make up 28 per cent of the overall loan book, was reported to have
grown 14.4 per cent with non-residential mortgages up 20 per cent and
auto loans up 10.7 per cent, all on an annualised basis based on 1QFY11
(ended Mar 31) figures.

PBBANK’s domestic loan market share
stood at 16.2% as at end-February 2011. For its deposits, PBBANK
continues to focus on core deposits such as fixed deposits, savings and
current accounts which it considers more stable compared to wholesale
deposits.

Looking ahead, PBBANK is targeting 14 per cent-15 per
cent loans growth for 2011 and aims to maintain an attractive dividend
payout policy of 50 per cent-55 per cent.

AmBank’s CW on PBBANK is priced at 15 sen with a gearing of 8.72 times.

Integrated
service provider for the oil and gas industry, DAYANG, is involved in
four major business activities namely provision of maintenance services,
fabrication operations, hook-up and commissioning and charter of marine
vessels that it owns.

Recently DAYANG’s wholly owned subsidiary won a RM802 million
contract
from Petronas Carigali for the provision of topside structural
maintenance services in Sarawak, Sabah and Peninsular Malaysia.

With
the contract, DAYANG saw its order book surging to RM1.8 billion.
Besides Petronas, DAYANG also has a topside maintenance contract from
Shell which runs till 2016.
AmBank’s CW on DAYANG is priced at 15 sen with a gearing of 3.45 times.

This
offer is aimed at sophisticated traders who are bullish on CIMB,
PBBANK, AFG, AFFIN and DAYANG. The new CWs have gearings ranging between
3.45 and 8.72 and are targeted at investors who want leveraged exposure
to the underlying. - Bernama