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KUALA LUMPUR (Dec 15): RHB Bank Bhd declined as much as 5.13% today, due to news that Aabar Investments PJS was ditching its entire stake in the lender.
The accountant, which lost as much as 30 sen earlier today, finally ended up at RM5.69 – down 2.74% or 16 sen after 10.55 million shares were traded – valuing it at RM22.82 billion. He was the third biggest loser on the local stock market today.
Bloomberg reported yesterday that Aabar was offering 169.5 million shares in RHB. The deal reportedly represents a 4.23% stake, which is Aabar’s total stake in the bank. Aabar ceased to be a substantial shareholder in RHB on June 24, 2019 after selling 231 million shares or a 5.76% stake in RHB.
The lot he was unloading was reportedly offered at between RM5.45 and RM5.62 each, with the entire block valued at RM923.78 million.
A consultation with Bloomberg today showed that around 169.52 million shares, representing a 4.2% stake in RHB, were disposed of through 15 off-market deals today. All operations were carried out at RM5.50 each, for a total of RM932.38 million.
In a note this morning, Maybank Investment Bank Research analyst Desmond Ch’ng noted that the sale of Aabar’s 4.2% stake was a positive move as it eliminated the stock’s final salient.
“It also marks the departure of the Middle Eastern investor who, together with its sister company Abu Dhabi Commercial Bank (ADCB), had been a shareholder since 2008,” Ch’ng said, noting that Aabar sold the stake through a secondary placement.
Ch’ng said the sale, concluded at RM5.50 per share, represented a 6% discount to RHB’s price of RM5.85 at the market close yesterday.
Ch’ng calculated that with the final placement of Aabar’s stake, which would have raised RM932 million, the total proceeds of the four placements made by Aabar when it comes to RHB shares stood at about RM3.8 billion. This excluded the dividends that Aabar would have received over the years from RHB.
Remember that ADCB acquired a 24.9% stake in RHB in 2008 for RM7.20 per share, for a total of RM3.9 billion. Aabar then acquired ADCB’s stake in the lender in June 2011 for RM10.80 per share for a cumulative sum of RM5.9 billion.
Following this, Aabar’s stake was reduced to 17.7% in 2016 when Aabar did not participate in RHB’s one-for-five rights issue. Subsequently, there were three placement exercises between 2018 and 2019 that further diluted Aabar’s stake in the bank to 14.7%, 10% and 4.2%.
Ch’ng also maintains its “buy” call on RHB, with a higher price target (TP) of RM6.70 (from RM6.20 previously), linked to a higher price-book value for calendar year 2021 (CY21) of 0.9 times, up from 0.8 times previously, with a return on equity of CY21 of 8.7% to account for improved liquidity and confidence.
Bloomberg indicated that RHB has 18 analysts who cover it, 14 have it in “buy” and four maintain it in “hold”, with a consensual TP of RM5.98, with individual TPs ranging from RM5 to RM7 per share.
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