RHB Investment Bank has maintained a “Buy” recommendation for Alliance Bank Malaysia Bhd with a target price of RM3.10.
On Thursday, Alliance Bank announced the disposal of its stockbroking business in Alliance Investment Bank to Phillip Futures.
The cash disposal will be equivalent to the net asset value of the stockbroking business (Sep 2021: MYR205.2m) and 60% of the aggregate brokerage fee of all brokerage transactions performed by Phillip Futures for a 12-month period from the specified transfer date. The transaction price will be agreed on a specified transfer point. The corporate exercise is expected to be concluded in 1HCY22.
RHB said that they were slightly positive on this as the disposal could support a faster normalisation of dividend pay-out which would bring dividend yields to 6-7%, and the redeployment of capital would help accelerate growth in its consumer, SME, and Islamic banking businesses.
The research house said that management first flagged its intention to exit the stockbroking business back in early 2020.
It said that overall, it was slightly positive on the deal as brokerage fee contributes minimally to ABMB’s operating income – approximately MYR12m or 1.3% of 1HFY22 operating income; the higher trading stamp duty of 15 bps from 10 bps, and the abolishment of the MYR200.00 stamp duty limit on each contract note, will likely dampen trading activities.
RHB said that ABMB would also benefit from the strategic stockbroking partnership arrangement with Phillip Capital Group, which allows ABMB’s customers to access regional trading platforms and a broad range of global investment products.
