KUALA LUMPUR (Jan 31): The Sarawak state government’s plan to increase its stake in Affin Bank Bhd to approximately 30%, has attracted buying interest in the stock, which has risen to an all-time high.
Affin Bank inched up 1.14% or three sen to RM2.65 at Wednesday’s opening bell, rising further to a high of RM2.69 in the morning session.
The counter then pared its gains to RM2.66 at the time of writing — up four sen or 1.53% — giving it a market capitalisation of RM6.24 billion.
Since the start of this year, Affin Bank’s share price has rallied over 27%.
Despite the share price rally, Affin Bank is valued at a price-to-book of 0.555 times, the lowest among its peers, Bloomberg data showed.
The counter, which was the fifth highest turnover stock on Bursa, saw some 3.81 million shares changing hands, more than double than its 200-day average volume of 1.51 million.
The Edge, quoting sources, reported on Monday the plan by Sarawak to increase its stake in Affin Bank would lead to it surpassing the Armed Forces Fund (LTAT) as the largest shareholder in the banking group.
LTAT currently holds a 28.79% equity stake in Affin Bank while its wholly-owned unit Boustead Holdings Bhd has a 20.02% stake. The bank’s second-largest shareholder is Bank of East Asia Ltd, with a 23.93% stake.
Sarawak, via its investment arm State Financial Secretary Sarawak, currently has a 4.8% stake in Affin Bank.
According to the report, Sarawak aims to become the bank’s major shareholder by acquiring Boustead’s entire 20% stake and a portion of LTAT’s holdings. This move is expected to elevate its overall ownership to approximately 30%, pending approval from Bank Negara Malaysia.
It is understood that the parties have agreed on a price that they consider to be a “win” for each side. They had submitted a letter to Bank Negara earlier this month, seeking approval for the proposed transaction, the report stated.
According to an analyst The Edge spoke to, a party would need Bank Negara's approval to acquire any multiple of 5% stakes in a bank, under the Financial Services Act 2013.
Affin Bank, which was listed on Bursa Malaysia in 1991, reported RM100.45 million net profit for the third quarter ended Sept 30, 2023 (3QFY2023), an 88.5% drop from RM872.36 million a year earlier.
Revenue for 3QFY2023 also tumbled 69.2% to RM500.44 million from RM1.62 billion in the previous year.