MCB hits up­per limit on first day as YSX-listed firm

The Myanmar Times - - Business - HTIN LIN AUNG htin­lyn­naung@mm­times.com – Trans­la­tion by San Layy

TRAD­ING on the Yan­gon Stock Ex­change has tailed off in re­cent months, but Myan­mar Cit­i­zens Bank’s (MCB) list­ing late last week showed there re­mains huge ap­petite for new sources of in­vest­ment. De­mand for shares in the lender – the first bank to list on the coun­try’s new bourse – was around 10 times the vol­ume of­fered.

MCB moved its 10.4 mil­lion shares onto the YSX on Au­gust 26, with each share priced at K6800. The shares hit their up­per limit for the day – K7800 – af­ter the morn­ing match­ing ses­sion.

Al­most 13,000 MCB shares were traded on the first day, but there were un­met of­fers to buy for 110,000. This helped en­liven what has be­come a quiet mar­ket of late, The last time there were so many shares traded in a sin­gle day was over a month ago, and most days see only a few thou­sand shares change hand. Al­though YSX of­fi­cials note the bourse is still in its in­fancy.

MCB’s ef­fect on the value of shares trad­ing on the YSX was more mod­est, be­cause in terms of mar­ket cap­i­tal­i­sa­tion – the to­tal value of a com­pany’s shares – it is worth much less than listed peers First Myan­mar In­vest­ment (FMI) or Myan­mar Thi­lawa SEZ Hold­ings (MTSH).

FMI’s mar­ket worth was K469.6 bil­lion as of last week’s close, MTSH was worth K167.3 bil­lion and MCB fin­ished its first day with a mar­ket cap­i­tal­i­sa­tion of just over K81 bil­lion.

The bank has be­come in­creas­ingly prof­itable in re­cent years, post­ing net profit af­ter tax of K5.3 bil­lion in the 2015-16 fi­nan­cial year up from K2.51 bil­lion in 2013-14. But MCB is fo­cused more on ex­pand­ing its op­er­a­tions and branch net­work than in­creas­ing prof­its, said chair U Toe Aung Myint at the list­ing cer­e­mony on Au­gust 26.

The firm has only 21 branches de­spite be­ing over 25 years old, but it is plan­ning to es­tab­lish an­other 50 branches in the next five years. In­vest­ment in a wider branch net­work and skilled staff will mean less cap­i­tal for share­holder div­i­dends, he added.

MCB in its dis­clo­sure doc­u­ments re­leased ear­lier this month said it plans to hire for­eign bankers with in­ter­na­tional ex­per­tise to mit­i­gate the risk of los­ing se­nior man­age­ment to ri­val banks.

This fo­cus on in­ter­nal in­vest­ment at the po­ten­tial ex­pense of prof­its is some­thing the bank will ex­plain to share­hold­ers, said U Toe Aung Myint.

U Win Myint, manag­ing di­rec­tor of MCB, said the share price would in­crease only if the bank in­vested in its ex­pan­sion, which would in time ben­e­fit in­vestors.

Of the bank’s 10.4 mil­lion shares, 4.45 mil­lion were held by in­di­vid­u­als on the board of di­rec­tors or key ex­ec­u­tives when the firm listed on the ex­change, ac­cord­ing to MCB doc­u­ments. The Min­istry of Com­merce, which founded MCB in 1992, has re­duced its hold­ings in the bank in re­cent years but still owns around 10pc.

FMI shares fin­ished last week un­changed at K20,000, while MTSH shares dropped K1000 to fin­ish at K43,000.

Photo: Aung Myin Ye Zaw

Pedes­tri­ans wait out­side MCB’s Yan­gon head­quar­ters.

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