MBSB surges on hopes of goodies for civil servants

KUALA LUMPUR: Shares in Malaysia Building Society Bhd (MBSB) surged on heavy volume on Thursday, Oct 6 amid expectations that Budget 2012 will provide a boon to civil servants.

The trading volume jumped 17.8 times to 43.44 million shares on Thursday, equivalent to 3.57% of the 1.22 billion issued shares. The stock rose to as high as RM1.51 before closing at RM1.47, up 14% from RM1.29 the day before.

There were over 150 off-market block trades throughout the day, according to data from Bloomberg.

MBSB warrants surged 33% or 15.5 sen to 62.5 sen on heavy volume of 50.18 million shares. The shares and warrants were the top two active counters on Thursday. MBSB's share price has been falling since trading at a high of RM2 on April 28, declining to a low of RM1.17 on Sept 26, before the latest rebound.

An analyst told The Edge Financial Daily that the rally could be driven by sentiment that the budget on Friday will be positive for civil servants.

MBSB provides personal loans to government servants which are forecast to contribute 43.6% of overall loans for FY11, according to a report by AmResearch.

If Friday's budget grants civil servants pay increments or bonuses, this could well translate into more borrowings from MBSB.

When contacted by The Edge Financial Daily, an MBSB official said, "The company has no announcements to make with regard to today's [Thursday] market activity. The 3Q results will be announced at the end of October."

MBSB is 65.5%-owned by the Employees Provident Fund (EPF) and 11.01% by Permodalan Nasional Bhd (PNB). Combined, the two government-linked funds own 76.51% of MBSB.

Another analyst suggested that a privatisation could be on the cards with the high level of ownership by the government in the company.

He also pointed out that the two government-linked funds that own MBSB have been active on the merger and acquisition scene lately.

Last week, EPF-controlled RHB Capital Bhd proposed a merger deal with OSK Investment Bank Bhd while PNB sprang a surprise takeover bid for property developer S P Setia Bhd.

AmResearch in a report dated Aug 4 maintained its "buy" call on MBSB with a target price of RM2.30.

RCE Capital Bhd, which also provides loans to civil servants, surged 8.43% to 45 sen from 41.5 sen with 865,900 shares traded.