BIMB’s possible restructuring a positive move

KUALA LUMPUR: BIMB Holdings Bhd’s (BIMB) possible corporate restructuring has been viewed positively by analysts as the group will derive tangible benefit should it decide to change its group structure.

According to reports, BIMB is said to be looking at undergoing a corporate restructuring which could mean that its subsidiary, Bank Islam Malaysia Bhd, will take over the listing status of the group.

While the potential restructuring have been reported, details of such restructuring have not been announced as yet.

“We believe that the propose restructuring is a good move. In our opinion, the group will derive tangible benefit should it decide to change its group structure, whereby its listing status is taken over by its banking subsidiary.

“Amongst the benefits are the reduction in cost and better capital adequacy. We also believe that shareholders will gain directly from participating in the performance at the bank level,” MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) opined.

It noted that should BIMB undergo the restructure, the group has to settle its RM1.3 billion sukuk first and according to the management, the fund required might be raised through equity financing.

“However, we do not rule out debt financing as well,” the research team added.

Furthermore, it pointed out that the strong performance of Bank Islam makes it ideal for it to take over the listing status of the group.

“Recall, Bank Islam Group’s FY18 profit before zakat and tax (PBZT) grew 5.6 per cent y-o-y to RM810.3 million due to 19.5 per cent y-o-y expansions in operating profit to RM946.3 million.

“Its gross financing grew 8.9 per cent y-o-y to RM45.7 billion.

“This follows from robust growth in all segments, namely consumer, commercial and corporate. These expanded 9.6 per cent y-o-y to RM35.1 billion, 9.8 per cent y-o-y to RM6.7 billion and 4.3 per cent y-o-y to RM4.6 billion respectively,” it said.

The research team added its asset quality also remains solid with GIF ratio trended lower to 0.92 per cent as at the fourth quarter of the financial year 2018 (4QFY18) from 0.97 per cent as at 3QFY18.

Overall, MIDF Research retained its ‘buy’ call on the stock.

It said: “We maintain our optimism on the group’s prospects. We like the group for its healthy asset quality and the robustness of its operations. We believe that the group’s growth potential will be further enhanced should the reorganisation goes through.

“A good example will be some of the performance of its peers that have went through the same restructuring. We strongly believe that the group present an attractive investment case.

“In addition, Takaful Malaysia seems to be able to solidify its position as the leading syariah compliant insurance provider.”