If based on the valuation proposed for both MBSB at RM 2.82 and RHBCap at RM 10.03 is not excited us. When we first started invest in both MBSB and RHBCap. We believe its long term value also its price earning valuation ratios are attractive. We valued MBSB at least RM 3.000 above and RHBCap at RM 10.00 above.
However, the post merger may given a higher valuation and move RHBCap and MBSB trading PE to 15 times. We are particular interested in MBSB merger to form the mega Islamic Banking. As we believe the growth of Islamic banking is still immense in Malaysia.
As such, we recommend a hold and if possible until post merger. MBSB may be given a higher valuation after post merger due to its upgrade become a mega Islamic bank. Also possibly tapping into larger opportunity due to its increase in size.