Share Price: RM4.61 | Target Price: RM4.90 | Rating: Neutral
Alliance Bank Malaysia (ABMB) hosted a briefing yesterday, providing further clarity on the proposed rights issue. The proposed rights issue is expected to raise c.RM600m, which will be allocated to enhance working capital, mainly to support ABMB’s double-digit loan growth target. Meanwhile, the rights issue is expected to raise its CET1 ratio by 1.1% to 13.5%. Following the capital raise, ABMB aims to achieve a credit re-rating to AA, which would help reduce its cost of funds (COF). The issuance will result in a 9.5% increase the number of shares outstanding to c.1.69bn. We estimate an 8.5% dilution on both FY26-27F EPS. PIB is keeping its earnings estimates unchanged, pending finalisation of the rights issue proposal. Neutral call and TP of RM4.90 maintained.
ABMB Research Update
Research House: Public Bank Investment Bank (PIB)
Analyst: Wong Ling Ling
FY2025 Forecast: Net Profit: RM725.8m | EPS: RM0.469 | DPS: RM0.225