MIDF Research has lowered the target price on RHB Capital Bhd to RM6.60, with a neutral rating as the banking group will undertake a rights issue exercise.
Once the exercise is completed, the earnings per share and return on equity (ROE) for the financial year ending Dec 31, 2015 for RHB Cap will be diluted to 67 sen and 9.8% as compared to MIDF’s previous estimates of 81 sen and 10.5% respectively. The book value per share will also decline to RM7.62 from its earlier forecast of RM8.06.
“Overall, the dilution impact was higher than anticipated due to the recent continued weakness in share price which has resulted in the rights issue price to be lower, hence higher number of rights shares to be issued,” it said on Tuesday.
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Once the exercise is completed, the earnings per share and return on equity (ROE) for the financial year ending Dec 31, 2015 for RHB Cap will be diluted to 67 sen and 9.8% as compared to MIDF’s previous estimates of 81 sen and 10.5% respectively. The book value per share will also decline to RM7.62 from its earlier forecast of RM8.06.
“Overall, the dilution impact was higher than anticipated due to the recent continued weakness in share price which has resulted in the rights issue price to be lower, hence higher number of rights shares to be issued,” it said on Tuesday.
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