27-03-2008: Maybank shares dive after BII purchase

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KUALA LUMPUR: Shares in Malaysia's biggest lender, Malayan Banking Bhd (Maybank), tumbled to a 3-1/2-year low on Thursday after it offered to buy Bank Internasional Indonesia (BII) for US$2.7 billion (RM8.64 billion).

Maybank surprised investors on Wednesday by saying it would pay US$1.5 billion for 56% of Indonesia's sixth-largest lender -- a 23% premium to Tuesday's share price -- and would offer to buy out the bank's minority shareholders for US$1.2 billion.

"The price tag... was more than 50% higher than we assumed for a mediocre franchise," Citigroup said in a note, downgrading Maybank to a sell from a buy. It slashed Maybank's target price to RM8.38 a share from RM10.63.

Maybank shares fell as much as 11% to RM8 a share in the first few minutes of trade, its lowest level since August 2004. At 0126 GMT, the stock fetched RM8.35.

The offer price represented 4.6 times book value, expensive even when compared with Chinese banks that trade at between 3.3 and 5.4 times book value, according to Reuters data. -- Reuters

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This post has been edited by ankw: Mar 27 2008, 05:57 PM

Uncertain times for IPOs

PETALING JAYA: The volatile market in Malaysia, uncertainties in the political scene and also the continuing fallout from the US credit crisis are making most companies rethink plans to seek a listing on Bursa Malaysia, analysts said.

Most companies, they said, might want to delay their listing plans until later this year, judging from the poor performance of the recent initial public offerings (IPOs), especially given the cautious investment climate where investors were shifting from equities into government bonds.

Of the eight companies listed this year, six closed below their IPO prices yesterday.

Winsun Technologies Bhd closed at 18.5 sen, down 78.2% from its offer price of 85 sen; TFP Solutions Bhd (down 69.8%), Weng Zheng Resources Bhd (-38.2%), SCGM Bhd (-17.9%), Signature International Bhd (-16%) and Key Asic Bhd (-1.25%).

Two companies that outperformed were recently listed Ewein Bhd, which is up 57% from the IPO price of 70 sen, while SLP Resources Bhd has put on 7%.

Even the share prices of companies that got listed last year when the market was bullish are now trading below their IPO price.

While some of the newly listed companies surged 30% to 40% over their offer price on listing day, the analysts doubted they could see a repeat this year. They expected the premiums for new IPOs to be in the 10% range.

Of the 25 companies that went public last year, 14 closed below their offer prices, with the worst performers being Bio Osmo Bhd (down 56%), Natural Bio Resources Bhd (-48.6%), Ogawa World Bhd (-48%) and Konsortium Transnasional Bhd, which took over the listing status of Park May Bhd, having lost 48%.

Ten others are still above their IPO price and this includes Petra Energy Bhd, whose IPO price was RM2.62. However, the company undertook a 1-for-2 bonus issue, and its price was reduced to RM1.74 ex-bonus. The counter closed yesterday at RM2.32, up 58 sen or 33% from the ex-bonus price.

The top performers from last year's IPOs included HELP International Corp Bhd (up 78%), MY E.G. Services Bhd (+74.5%) and technology-based Pantech Group Holdings Bhd (+56.7%)

Hap Seng Plantations Holdings Bhd's share price was unchanged at RM2.65 from its IPO price. Heavyweight Sime Darby Bhd closed at RM8.60, down 3.3% from the reference price of RM8.90.

OSK Investment Research senior vice president Jeffrey Tan said Sime Darby was probably a victim of the broad sell-down of the market by foreign funds.

He said there were selected theme plays last year, specifically on plantations and oil and gas (O&G) stocks, during the run-up in these commodities.

"Some of the smaller capitalised stocks benefited from such themes and were playing catch up with their bigger peers," he said.

However, compared with some sectors in the broader market, IPOs were probably ignored by investors, mainly due to their more cautious risk appetite.

Meanwhile, the head of a local bank-backed research house said while 2007 was a bullish market with the big capitalised stocks outperforming the lower liners, it was not exactly a great market for IPOs.

"We expect the stock market to be volatile this year due to external factors and uncertainties in the political outlook," he said, adding that he expected a difficult year for companies seeking to go public.

His year-end target for the KL Composite Index (KLCI) is about 1,385 points, after factoring in the uncertainties.

The KLCI closed at 1,221.98 yesterday, down 213.4 points, or 14.86%, from 1,435.38 on Jan 3. The benchmark is down 302.71 points, or 19.85%, from the record high of 1,524.69 on Jan 14.

Companies are also awaiting the details on the merger of the Main Board and Second Board, which Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff recently said could take six to 12 months.

Analysts said some companies could also opt to wait for the new framework on listing requirements and mergers before making plans for an IPO.

http://biz.thestar.com.my/news/story.asp?f...83&sec=business