MBSB's possible MIDF acquisition a positive surprise, says Kenanga Research

MBSB's possible MIDF acquisition a positive surprise, says Kenanga Research

The possible acquisition of Malaysian Industrial Development Finance Bhd (MIDF) by Malaysia Building Society Bhd is a positive surprise, Kenanga Research said.

KUALA LUMPUR: The possible acquisition of Malaysian Industrial Development Finance Bhd (MIDF) by Malaysia Building Society Bhd is a positive surprise, Kenanga Research said.

This would inject new diversified businesses into MBSB, said Kenanga Research.

Bank Negara Malaysia has granted approval for MBSB to commence negotiations to acquire MIDF from Permodalan Nasional Bhd (PNB).

In a bourse filing on Wednesday, MBSB said Bank Negara, in its letter dated April 6, stated it had no objection for MBSB to enter into discussions with PNB to explore the possibility of acquiring the 100 per cent stake in MIDF.

Kenanga Research analyst Clement Chua believes that the acquisition requires further boons to uplift sentiment amid disappointments in MBSB's key financing business.

In 2019, MIDF was involved in a proposed merger with AL Rajhi Banking & Investment Corp (M) Bhd but it failed to materialise, said Chua.

"We reckon any transactions could involve fund raising or share swaps as MBSB's internal cash pool only stands at RM655 million per fourth quarter financial year 2021 accounts.

"However, as talks have yet to commence, we leave all present model assumptions unchanged

"We have an Underperform call and target price of 52 sen on MBSB," Chua said.

https://www.nst.com.my/business/2022/04/786645/mbsbs-possible-midf-acquisition-positive-surprise-says-kenanga-research