KUALA LUMPUR (Oct 19): Public Bank Bhd (KL:PBBANK) may unlock an unrealised gain of RM521 million if Japan's MS&AD Insurance Group Holdings Inc acquires its 44.15% controlling stake in LPI Capital Bhd (KL:LPI), said CIMB Securities.
This is based on Public bank acquiring the LPI Capital stake in December 2024 for RM1.72 billion at RM9.80 a piece and the current share price of RM12.76, valuing the investment at RM2.24 billion.
However, the research firm cautioned that Public Bank would need to weigh any potential divestment against the loss of steady earnings and surrendering control of LPI Capital’s profitable insurance operations, particularly Lonpac Holdings Bhd.
CIMB Securities' report follows a Bloomberg article that said MS&AD is exploring a takeover of LPI Capital as part of its overseas growth.
MS&AD has a foothold in Malaysia through MSIG Malaysia. A merger between MSIG and Lonpac would create one of the country’s largest general insurers, which CIMB Securities estimated would have a combined market share of about 16%, surpassing Allianz General Malaysia’s 15%.
“Any disposal would, therefore, need to offer compelling financial and strategic benefits to justify the loss of ownership and recurring earnings contributions,” CIMB Securities said.
CIMB Securities further expects Public Bank to post a broadly flat 3QFY2026 core net profit of RM1.85 billion in November, a marginal increase from previous year, supported by resilient non‑interest income from wealth management and foreign exchange.
The research house maintains its "buy" call on Public Bank but reduces its target price to RM5.35 from RM5.50, trimming FY2026–FY2028 earnings forecasts by 12.5%, 2.1% and 2.5%.
Public Bank said in last week that its consolidated net assets and earnings per share could be reduced by four sen, following an expected HK$1.964 billion — or about RM1.1 billion — goodwill impairment at its Hong Kong‑listed subsidiary, Public Financial Holdings Ltd (PFHL).
Based on Public Bank’s effective stake, this translates into a RM748 million hit, or about 11% of group earnings, Maybank Investment Bank said in a separate research note.
“Given that this write-off is one-off in nature and a non-cash item, we expect the group’s dividend payment to be intact,” Maybank Investment said.
At the time of writing, Public Bank shares were down 13 sen or 2.69% at RM4.70, valuing the group at RM91.2 billion.