KUALA LUMPUR, April 30 — Public Bank shares fell 0.69 per cent or 14 sen following its announcement to undertake a proposed rights issue to raise up to RM5 billion for working capital purposes.
The stock fell to RM20.02 as at 10:28am, with 1.53 million shares transacted.
In a filing to Bursa Malaysia yesterday, the bank said pricing has not been determined but management targeted a discount of between 20 per cent and 35 per cent.
The exercise is expected to be completed by the third quarter this year.
Hong Leong Investment Bank (HLIB) Research said assuming a 27 per cent discount of the issue price, this would involve a rights issue of about 350.2 million rights shares.
“Common equity tier 1 of 8.5 per cent as at March this year would improve by 140 basis points to about 9.9 per cent. Book value will increase by about 13 per cent.
“However, earnings per share (EPS) and returns on equity (ROE) will be diluted by about 6 per cent and 16 per cent, respectively,” the research house said in a note.
HLIB Research is neutral to slightly positive about the rights issue because despite the EPS and ROE dilution, its capital ratio will be boosted to a level that is comparable to its peers.
The research house maintained its “hold” call on the stock, with an unchanged target price of RM19.08. — Bernama
