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Friday, April 20, 2018

CIMB Research positive on Maybank’s possible listing of Etiqa

Friday, 20 Apr 20188:37 AM MYT

KUALA LUMPUR: CIMB Equities Research is positive on Maybank’s possible listing of its insurance arm, Etiqa, on Bursa Malaysia.

However, it said on Friday that it was retaining a Hold call on Maybank as it thinks this has been priced in, given its high FY19F price-to-earnings (P/E) of 13.5 times versus historical five-year average of 11.1 times.

“Our FY18-20F earnings per share (EPS) and dividend discount model (DDM) based target price of RM9.80 are intact. Upside/downside risks: uptick/drop in loan and fee income growth. We prefer RHB Bank,” it said.

Maybank’s stake in the insurance/takaful entity Etiqa, is parked under its 100%-owned Etiqa International Holdings (EIH), which owns 69% of Maybank Ageas Holdings (MAH) while Ageas (Not Rated), the Brussels-based international insurer, holds the remaining stake. MAH owns the controlling stakes in its insurance and takaful entities.

CIMB Research estimates the market capitalisation for Etiqa would be between RM5.3bil and RM10.7bil upon listing, based on price-to-book value (P/BV) of 1.4 times to 2.8 times using Syarikat Takaful Malaysia’s P/BV as benchmark.

“We estimate Maybank shareholders could get nine to 17 sen worth of Etiqa shares (based on book value) for each Maybank share held from any distribution of Etiqa shares.

“We estimate that every 1 percentage point stake in EIH distributed to shareholders would lower Maybank’s profit before tax by 0.1%, based on FY17 earnings.

“Maintain Hold given unattractive FY19F P/E of 13.5 times (above five-year average of 11.1 times),” it said.


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