Mild positivity on Maybank Kim Eng’s tie up with Mizuho
KUCHING: AmInvestment Bank Bhd ( AmInvestment Bank) is mildly positive on Maybank Kim Eng, the investment banking arm of Maybank, posible collaboration with Mizuho Financial Group Inc (Mizuho), where the former will provide trading execution services as well as distribution of research work on companies in Southeast Asia to Mizuho.
“We believe that this would allow Mizuho to channel their client trades on shares quoted on Bursa Malaysia to Maybank Kim Eng which would be beneficial to the Group’s fee based income,” it explained in a research report yesterday.
Maybank Kim Eng is currently present in Malaysia, Singapore, Hong Kong, Thailand, Indonesia, Philippines, India, Vietnam, Great Britain, the US as well as the Middle East via Anfaal Capital.
“This tie-up with Mizuho will allow Maybank Kim Eng to extend their reach to Japanese institutional clients which are eager to earn higher returns by trading in securities abroad as a result of the negative interest rates from the policy of Bank of Japan,” it added.
“Under this collaboration, Maybank in return will provide Mizuho with the corporate access to senior management of companies in Southeast Asia.”
AmInvestment said this collaboration is similar to the tie- up between Japan’s Daiwa Securities Group, Inc ( Daiwa Securities) with Affin Investment Bank ( Affin IB) where an agreement was entered into by the two parties in 2013.
To recall, Affin IB will distribute its research reports on Malaysian equities to Daiwa Securities in return for access to the latter’s global client base.
Separately in 2012, CIMB Group entered into a partnership with John Keells Stock Brokers (JKSB) to promote and facilitate trading on Colombo Stock Exchange and provide research under CIMB/ JKSB co-brand name to the clients of CIMB investing in Sri Lanka stocks.
“The news has yet to be announced officially on Bursa Malaysia. Overall, we view it as mildly positive as it is expected lift the brokerage income for Maybank Kim Eng and fee income of Maybank Group.”
Recall in 1Q16 by geographical segments, Malaysia, Singapore and Thailand contributed the highest at 42 per cent, 20 per cent and 20 per cent respectively to Maybank Kim Eng’s total income while other markets contributed only three per cent.
In terms of equity trade, Maybank Kim Eng commands a strong market share in Thailand and Malaysia, ranking first and secnd respectively.
“While the dividend yield is attractive at 6.8 per cent for financial year 2017 – higher relative to peers – we expect the upside potential to the stock to be limited,” the research firm stated.
“This is largely due to concerns on asset quality with credit cost trending higher in the near term.
“In 1Q16, impairments of Corporate and Business Banking loans have started to show up while in Singapore, there were impairments comprising a mixture of corporate loans to the Oil & Gas, Shipping and Manufacturing sectors.
“Moving ahead, we expect provisions on impairment of securities to be made in either 2Q16 or 3Q16 from the Group’s holdings of Swiber Holdings’ debt papers consequently impacting its earnings. Swiber Holdings has already filed for liquidation.”