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Thursday, January 23, 2014

Maybank KE Research maintains Buy on MPHB Capital, upbeat on prospects


KUALA LUMPUR: Maybank KE Research has maintained its Buy call on MPHB Capital with a target price of RM2.12 as Bank Negara has given MPHB its permission to commence preliminary negotiations with an interested party in relation to the possible disposal of a minority equity interest in its insurance arm.
In a note on Thursday, Maybank KE said MPHB has has five years to 2018 to pare its stake in Multi-Purpose Insurans (MPI) to less than 50% to be exempt from Bank Negara’s financial holding company ruling.
“As such, we think that a minority interest here could be 49% at first, with a view to crossing the 50% threshold at a later stage,” it said.
It added MPI is currently valued at a historical P/BV of 1.6 times in its our SOP computation.
“Assuming a P/BV of 2.2 times, the average valuation for some recent general insurance M&As, this would lift our SOP by 11% to RM2.35, and to RM2.62 if we factor in another 27sen from the disposal of the group’s 208 acres in Balik Pulau, Penang, at RM25psf versus the RM7psf assumption currently imputed in our SOP (the deal has yet to be completed),” it said.
It added currently a mid-sized general insurer that ranked 13th of 25 general insurance companies in 2012, MPI could certainly do with scale, and a strategic partner, particularly a large foreign one, would no doubt provide this.

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