Hwang DBS Vickers: BIMB earnings to double post Bank Islam acquisition

Hwang DBS Vickers: BIMB earnings to double post Bank Islam acquisition
Business & Markets 2013
Written by theedgemalaysia.com
Friday, 02 August 2013 12:18

KUALA LUMPUR (Aug 2): Hwang DBS Vickers Research has maintained its Hold rating on BIMB HOLDINGS BHD [] at RM4.12 with a higher target price of RM4.30 (from RM3.90) after the banking group acquired the remaining stake in Bank Islam from Dubai Financial Group (30.5%) and LTH (18.5%) for RM2.8 billion.

In a note Friday, the research house said that post acquisition, BIMB’s earnings would double, adding that BVPS and EPS dilutive given the enlarged share base but ROE accretive.

The research house said that post acquisition, BIMB’s FY14F earnings will be enhanced by 60%.

“But the enlarged share base from 1,067m to 1,920m (rights plus fully diluted shares from warrants) will dilute FY14 BVPS and EPS by 3% and 11%, respectively, but the deal is ROE accretive (+2.4ppt) due to the larger earnings enhancement versus book value,” it said.

Hwang DBS Vickers Research said tighter measures on consumer loans could cap growth and cut its FY13-15 loan growth target.

“Maintain Hold; target price raised to RM4.30TP to account for the acquisition and rights impact,” it said.
BIMB was among the top gainers and rose 14 sen to RM4.45 with 747,100 shares done at 12.15pm.