Share Price: RM5.09 | Target Price: RM5.55 | Rating: HOLD

Alliance proposed a renounceable rights issue to raise around RM600m for working capital purposes. HLIB expressed surprise but does not think it is necessarily negative as it will shore up capital to sustain loans expansion momentum. It will also take advantage of the recent share price strength, and could be used as an opportunity to reward loyal shareholders to acquire more shares at a good discount. Based on 20% discount to its TERP, HLIB estimates the financial impact to be 7% dilution to FY26 EPS and ROE declining 0.5% while CET1 ratio is projected to increase 1.1ppt. HLIB kept is forecasts and HOLD rating unchanged.