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Free Malaysia Today
27-05-2025
- Business
- Free Malaysia Today
Hong Leong likely to drop out of FBM KLCI index
The Hong Leong Financial Group has failed to meet the requirements to enable it to stay on the FTSE Bursa Malaysia index. (Facebook pic) KUALA LUMPUR : Hong Leong Financial Group Bhd (HLFG) is likely to be replaced by AMMB Holdings Bhd (AmBank) on the FTSE Bursa Malaysia (FBM KLCI) index when the semi-annual review comes up next week. CIMB Securities Sdn Bhd expects HLFG to fail the liquidity screening requirement, which mandates a monthly median trading velocity of at least 0.04% in eight of the past 12 months. The group has met the requirement for only seven months. The review, to be based on share prices at the close of trading yesterday, is scheduled for June 4, a day before the official release of the final review. Any change in the index constituents will take effect on June 23, according to a note issued by CIMB Securities this morning. The FBM KLCI tracks the performance of the 30 largest companies by market capitalisation that are listed on the main board of Bursa Malaysia. To remain on the index, existing constituents must satisfy three criteria, which are to meet market capitalisation ranking requirements, maintain a free float of 15% and pass the liquidity screening test. The liquidity screening test assesses the median daily trading volume as a percentage of shares in issue over a 12-month review period. A stock must maintain a monthly median daily trading volume of at least 0.04% of its shares in issue, after applying any investability weightings, in at least eight out of the past 12 months. If an existing FBM KLCI constituent drops out of the index, it will be replaced by the highest-ranking non-constituent company based on market capitalisation. 'As of May 26, AmBank holds this position. Our checks also confirm that AmBank meets the other two inclusion criteria: it has a minimum free float of at least 15% and has satisfied the liquidity requirement, with a monthly median trading velocity of at least 0.05% in the past 12 months (June 2024–May 2025),' CIMB Securities added.
Malay Mail
21-05-2025
- Business
- Malay Mail
Potential merger between Affin and AMMB could expand share base significantly, says CIMB Securities
KUALA LUMPUR, May 21 — CIMB Securities Sdn Bhd expects the potential merger between Affin Bank Bhd and AMMB Holdings Bhd to entail significant issuance of new shares, which will likely be quite dilutive. In a note today, CIMB Securities said it assessed two possible merger scenarios for Affin and AMMB, although it was not particularly enthusiastic about the merger. 'A merger between two domestic banking entities would necessitate the acquisition of the entire stake, given that banks are not allowed to hold two banking licenses. 'If Affin acquires AMMB at a price-to-book value ratio (P/BV) of one time, Affin will need to issue a significant 7.7 billion new shares at the current market price of RM2.60 to acquire 100 per cent of AMMB,' it said. CIMB Securities said the scenario would mean a several-fold increase in Affin's issued shares to 10.25 billion from 2.5 billion shares currently. On the other hand, it said the second scenario would see AMMB acquiring Affin at a P/BV of one time, which would still lead to a significant 63.8 per cent increase in AMMB's issued shares base. 'AMMB's target price would decline to RM4.27 (current: RM5.70) based on a return on equity of 7.8 per cent (current: 8.6 per cent) and a fair P/BV of 0.7 times (current: 0.9 times). 'The target price may be increased if AMMB were to buy Affin at a P/BV of 0.6 times or lower (implying an acquisition share price of only RM2.75 or lower for Affin), which may lead to AMMB's target price moving up to RM6.35 for the financial year 2026,' it said. However, CIMB Securities noted that an excessively low acquisition price for Affin's shareholders may be deemed unpalatable by Affin's minority shareholders. Recently, news reports indicated that the Sarawak government may be looking to buy a stake in another bank and merge it with Affin, and AMMB's major shareholder has reportedly been approached. The Sarawak government has since denied sending any government representative to discuss the matter with Amcorp Group Bhd, but it is reported that it remains open to negotiating with any entity that wants to collaborate with the state government. — Bernama
