Positive view on RHBCap scheme

PETALING JAYA: RHB Capital Bhd’s Career Transition Scheme (CTS) for 1,812 staff is deemed positive, as this allows the group to operate from a leaner base from FY16 onwards, said HLIB Research.

“While one-off CTS cost of RM309 million will hit our FY15 net profit forecast by 15.7%, this will result in significant reduction in future personnel cost, hence enhancing its earnings forward. The expected RM193 million personnel cost rationalisation accounts for 9.1% of our FY16 net profit forecast,” HLIB said in a report yesterday.

It maintained its forecast for now, pending results announcement by end-November.

The research house maintained its “buy” call on RHBCap, given its inexpensive valuations keeping its target price at RM7.53.

Meanwhile, Kenanga Research expects the CTS payout to amount to RM206 million for 2015 and the remaining RM103 million in 2016, as the successful applicants will be released in batches within a three-month period.

It revised its earnings forecasts down 14% for FY15 and up 2.2% for FY16.

It maintained an “outperform” call on RHBCap, adding that the stock is looking attractive with its low price to book but decent return on equity among its domestic peers.