RHB Cap, OSK slump but CIMB climbs

 RHB Cap was the top loser among the 30-stock FBM KLCI stocks but CIMB advanced despite news that RHB Cap could be the holding company in the proposed merger with Malaysia Building Society Bhd (MBSB).

RHB Cap fell 23 sen to RM9.22 but CIMB rose eight sen to RM7.20 and MBSB added four sen to RM2.47. OSK Holdings, which has a large stake in RHB Cap, fell 10 sen to RM2.37.

A local business report said one of the routes being considered currently is for CIMB Group to sell its entire banking business to RHB Cap to be paid by an issuance of new RHB Cap shares. Once RHB Cap takes over CIMB Group's banking assets, the commercial and investment banking businesses of both groups will be consolidated.

The report, quoting sources, saud this route to merger is preferred over an outright purchase of RHB Cap of its assets as this will likely be blocked by Abu Dhabi-based Aabar Investments, which had made clear its objection to any sale unless it is at a price it is happy with.

This proposed scheme is contrary to popular belief that CIMB Group will be the acquired in the mega merger and end up the holding company.

RHB Capital: Shareholders OK Share Issuance At MYR7.36/Shr For OSK Investment Bank Acquisition

30 Aug 2012

KUALA LUMPUR--Malaysia's RHB Capital Bhd. (1066.KU) said Thursday it was approved by its shareholders to issue 245 million shares to part-finance the 1.95 billion ringgit ($623.6 million) acquisition of OSK Holdings Bhd.'s (5053.KU) investment banking business. The shares will be issued at MYR7.36 apiece, taking into consideration RHB Capital's five-day volume weighted average market price of MYR7.42 up to Sept. 28, 2011--before it informed the country's central bank of its plan--after adjusting for dividends, the lender said in a statement. "The transaction is expected to be completed in the fourth quarter of 2012 upon the receipt of all necessary approvals," RHB Capital added. The share issuance will raise MYR1.80 billion for the proposed acquisition of OSK Investment Bank Bhd. and the remaining MYR147.5 million of the deal price will be paid in cash. OSK Holdings will become RHB Capital's third largest shareholder with a 9.88% stake once the deal is completed. The deal implies a 1.77 times multiple on OSK Investment Bank's book value of MYR1.10 billion as of Sept. 30 and represents 18.9 times its normalized earnings for the past 12 months after adjusting for one-time costs.

OSK Cuts Censof Holdings To Sell; 1H Below View

23 Aug 2012

OSK Research downgrades Censof Holdings (5195.KU) to Sell from Buy with a lower target of MYR0.29, based on 9X FY13 P/E, vs MYR0.57 previously after the company's 1H earnings result missed market estimates; the house notes that Censof's net profit in 1H at MYR3.2 million accounts for only 15%-16% of consensus full-year estimates due to higher operating costs to support increased activities, rising depreciation, and amortization charges.  "We foresee a stronger 2H for the company, but doubt if it can make up for the current shortfall," says OSK, in cutting Censof's earnings forecast by 47%-48% for FY12-FY13 on the back of its weak financial results. The stock is currently up 0.4% at MYR0.38.

RHB Capital, OSK Deal To Create Malaysia's Largest Brokerage

28 May 2012 1

-- RHB Capital to buy OSK Holding's investment banking business in MYR1.95 Bln cash-and-shares deal -- Merged entity to be the largest brokerage in Malaysia with 15% market share -- Aims to earn at least 10% of its revenue from overseas (Adds deal details and background throughout) KUALA LUMPUR -The consolidation among Southeast Asian banks forced by competition and cheaper lending that squeezes profit margins was brought into sharp relief Monday when Malaysian lender RHB Capital Bhd. (1066.KU) said it will buy OSK Holdings Bhd.'s (5053.KU) investment banking arm for MYR1.95 billion ($620.2 million) in cash and shares. The deal will create the country's largest stock brokerage and investment bank by assets. It will have approximately 15% of Malaysia's brokerage business. The consolidation will help lower costs and create a company employing almost 4,000 people--none of whom will lose their jobs, RHB Capital and OSK said Monday. It will expand across Singapore, Vietnam, Thailand, Indonesia, Hong Kong, China and Cambodia with the intention of generating at least 10% of its annual revenue from overseas, Kellee Kam, group managing director of RHB Capital said at a news conference. He expects positive earnings per share after 18 months. RHB Capital said Monday it will pay MYR1.95 billion ($620.2 million)--MYR147.5 million in cash and 245 million new shares at MYR7.36 each--for OSK Investment. Separately, RHB Capital said it will pay MYR39.30 million cash for 20% of OSK Trustees Bhd., all of OSK Investment (Labuan) Ltd. and 59.95% of Finexasia.com Sdn. Bhd. This deal, which is expected to be completed in the October-December period, continues the recent consolidation of Southeast Asian banks. Top lender Malayan Banking Bhd. has been looking to expand in to Laos, Vietnam, Cambodia, Indonesia and Thailand after it acquired Kim Eng Group last year for $1.4 billion. Rival CIMB Group Holdings bought 60% of Bank of Commerce of the Philippines for MYR881 million and Royal Bank of Scotland Group PLC's (RBS.LN) cash equities and associated investment banking businesses in the region. Ebbing risk appetite from overseas investors because of the euro-zone debt crisis has also hurt the appeal of emerging-market shares. Credit Suisse advised RHB and Goldman Sachs was the investment banker to OSK.