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Friday, June 24, 2011

RHBCap's valuation intact: HwangDBS (BT)

RHB Capital Bhd's (RHB Cap) fundamental valuation is intact, with the target price remaining at RM10.00, says HwangDBS Vickers Research Sdn Bhd.

This was based on the assumption of a five per cent long-term growth, 10.5 per cent cost of equity and 16 per cent return on equity, it said in a research note today.

HwangDBS said RHB Cap remains attractive despite Maybank and CIMB have jointly announced that they would not pursue a merger with RHB Cap at this juncture.

This has given RHB Cap good domestic growth prospects and gradual regional expansion, it said.

RHB Capital Bhd may revist earlier market speculation of a potential merger with AMMB Holdings Bhd given that this is a better fit and a marriage of equals.

In a note today, OSK Research Sdn Bhd said the merger would propel AMMB from being the sixth largest bank to the fourth largest in Malaysia.

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