Friday, September 30, 2011

RHB Capital, OSK shares up on possible merger plan

KUALA LIUMPUR: RHB CAPITAL BHD [] and OSK HOLDINGS BHD [] (OSK) shares advanced in early trade on Friday, Sept 30 after the former said it intends to start merger talks with OSK Investment Bank Bhd.

At 9.05am, RHB Capital was up 12 sen to RM7.28 with 179,900 shares done while OSK jumped 29 sen to RM1.68 with 2.51 million shares traded.

RHB Capital and OSK have submitted applications to Bank Negara Malaysia for approval to commence negotiations for a possible merger between the two groups.

In separate filings on Thursday, Sept 29, the companies said they were seeking Bank Negara's approval in principle to commence negotiations for a possible merger of businesses between the RHB banking group and OSK investment banking group.

MIDF Research maintained its Buy rating on RHB Capital and target price of RM9.35, and said valuation remains undemanding at PER of 12.3 times to its EPS forecast of 76 sen and PBV of 1.62 times to projected book value for FY12.

'We retain our Buy recommendation on the stock. As it is merger talk is still in preliminary stages with not much detail available, we make no adjustments to our forecast at this juncture,' it said on Sept 30.

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