MBSB Rises To High Of RM1.24 On AFB Purchase

MBSB Rises To High Of RM1.24 On AFB Purchase - Shares of Malaysia Building Society Bhd

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 (MBSB) rose to its Sept 20 high of RM1.24 when it resumed trading on Tuesday after announcing its RM644.95mil purchase of Asian Finance Bank Bhd (AFB).

At 9.20am, MBSB was trading at RM1.20. There were 8.38 million shares done at prices ranging from RM1.19 to RM1.24.

The FBM KLCI was up just 0.62 of a point or 0.04% to 1,742.91. Turnover was 392.61 million shares valued at RM122.71mil. There were 205 gainers, 151 losers and 271 counters unchanged.

MBSB’s purchase of AFB will transform it into a full-fledged Islamic bank. The acquisition will be settled via cash and issuance of new MBSB shares.

“The merged entity is expected to leverage on the strength of MBSB’s business, and the banking licence held by AFB is anticipated to provide a unique opportunity for the merged entity to emerge as a full-fledged Islamic banking franchise in Malaysia,” said MBSB.

MBSB had previously failed twice in its attempt to transform itself into a bank.

The acquisition of AFB’s entire equity will be satisfied via internally-generated funds amounting to RM396.89mil and the issuance of new ordinary shares in MBSB.

Upon completion of the acquisition, three of the shareholders of AFB will hold a minority equity interest of 3.66% in MBSB’s enlarged share base.

MIDF Research described the purchase consideration as fair as it was at a price-to-book value (PBV) of 1.3 times based on net assets as at Dec 31, 2016 of about RM497.26mil. 

“We believe that the valuation of the merger is fair. Our view is premised on valuation of previous financial sector mergers of approximately 1.4 times PBV,”  said the research house.

It maintained its target price of RM1.50 for MBSB.