MPHB Capital up 6% on Bank Negara's approval for insurance arm stake sale

KUALA LUMPUR (Nov 6): MPHB Capital Bhd rose as much as 5.7% before reducing gains after Bank Negara Malaysia (BNM) approved its planned 49% stake disposal of its insurance unit.

MPHB Capital rose as much as 13 sen to RM2.43 before settling at RM2.37 at 12.30pm.

For comparison, the FBM KLCI fell 3.34 points or 0.2% to settle at 1,844.44.

In a filing with Bursa Malaysia yesterday, MPHB Capital said BNM had approved the sale by Multi-Purpose Capital Holdings Bhd (MPCHB) of a 49% stake in Multi-Purpose Insurans Bhd (MPIB) to an interested party.

MPCHB is a wholly-owned subsidiary of MPHB Capital.

MPHB announced that BNM had also approved the grant of options by MPCHB to the interested party. The move will allow the interested party to acquire or dispose its stake in MPIB.

Today, UOB Kay Hian said in a note it was positive on BNM’s approval for the “long-anticipated” 49% stake sale in MPIB.

“In addition to synergistic benefits, this disposal would also provide MPHB an opportunity to use the proceeds for value-accretion property development and capital management over the intermediate term,” the UOB Kay Hian said.

UOB Kay Hian said it expected the disposal price to be announced soon, potentially at 2.4-2.5 times price-to-book valuation.

This is “given the lack of potential sellers in the local general insurance space and the potential of Malaysian entities serving as a regional launch pad for foreign investors”, UOB Kay Hian said.

UOB Kay Hian maintained its "buy" call on MPHB Capital with a target price of RM2.80.

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