Friday, June 24, 2011

RHB Capital - Msia

Was looking at the takeover possibilities with Maybank and CIMB and did some analysis. The deal price was expensive (in terms of PBR ROE and other growth metrics) but I did anticipate a high possibility of it going through with Maybank as the buyer due to political factors.

Further, with the deal being a mix of cash and stock, I was bidding for time to enter the position due to the unfavorable economics of the deal, payment methods to shareholders as well as poor macro backdrop (especially for such deal mechanics). Alas the deal was called off. It was said that the high deal price and complications from Abu Dhabi SWF's holdings resulted in the deal being called off.

Last I looked, the lowest entry price was at RM 9.80 and currently its at RM 8.87 or a 9.5% decline which I have fortunately avoided for the portfolio. We can expect to see further weakness in the price of this counter until it reaches a reasonable enough level to allow for value creating consolidation within Malaysia's banking industry.



Some company

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