The reasons we buy MBSB – heavily

1. Revenue increased with profits lowered due to NPL adjustment to 3 months. The move to align themselves compliance to be a bank.

2. NPL 80% recoverable and adjustment may write back as profit in 2017. Share price currently already lowered to reflect this.

3. Vision to become a regional Islamic banking player.

4. Strong share holders from EPF to CMY. Especially the later that have strong financial merger knowledge. 70% shares are tightly hold by a few major shareholders.

5. Strong unique loan model that deduct from source for repayment. (Government servant)

6. Strong state government relationship as depositors.

7. Target to bring down NPL to 2%

8. Potentially obtain banking license by BNM or merger with Bank Islam in radar.

9. Strong management team with the right people in the right position. Personally I like the CEO and CFO.

10. Strong messages from both MBSB and EPF CEOs on bad debts are not the main reason for the price drop.

11. Warrant expired on 31st May which may be a reason due to major share holders conversion.

12. 2 calls right issues that is under way. Partly pay by the company using reserve.

13. NTA above 1.7 and if EPS regularised back to 20 cents a year after right issue. A merger or a banking license may give them 15 times PE at RM 3.00.

After all, how can anyone make EPF investment fail in this scenario. No matter BN or PR. All must make them a success. As it belongs to people.  We like the current price and we would like to continue to buy into our portfolio.

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