Friday, 13 April 2012

CIMB Research maintains Neutral on AMMB

KUALA LUMPUR (April 13): CIMB Research has maintained its Neutral rating on AMMB HOLDINGS BHD [] at RM6.35 with a target price of RNM6.22 after AMMB’s 51%-owned AmG Insurances entered into a conditional sale and purchase agreement to acquire 100% of Kurnia Insurans from Kurnia Asia for RM1.55 billion cash.

The research house said that AMMB’s AmG Insurance will emerge as the largest general insurer in Malaysia following its acquisition of Kurnia Insurans, which was sealed by the execution of S&P agreement yesterday.

The research house sid in a note Frday tha the deal would provide cost synergies and cross-selling opportunities in longer term.

“But the earnings accretion for AMMB will initially be minimal at only about 1% for FY3/14.

“We retain our valuation basis of 10% discount to DDM value and Neutral rating given the below-industry loan growth,” it said.

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