HONG LEONG Investment Bank Bhd (HLIB) maintains its “hold” call on Public Bank Bhd with a target price of RM18.32.
The target price is based on Gordon Growth with return of equity of 16.6 per cent and weighted average cost of capital of 8.2 per cent.
HLIB said in a research note that the
bank’s recent conditional equity capital transfer agreement with Joint Stock Com-
mercial Bank for Investment and Development of Vietnam for the acquisition of the remaining 50 per cent equity in VID Public Bank (VPB) for US$76.6m (RM245 million) cash has very little financial impact on its operations.
“It is very marginal given that its Vietnam operation contributes very little to the bottom line. Based on financial year 2013 accounts, we estimate that the VPB stake only contributed 0.16 per cent to Public Bank’s net profit,” it said.
