KUALA LUMPUR (March 3): AMMB Holdings Bhd’s share and structured warrant prices opened lower today on Bursa Malaysia after a two-day suspension following the financial services provider's announcement on Friday (Feb 26) regarding its 1Malaysia Development Bhd (1MDB)-linked RM2.83 billion global settlement proposal.

At 9am today, AMMB's share price fell 51 sen or 16.14% to RM2.65 while AMMB structured warrant AMBANK-C22 dropped 12.5 sen or 83.33% to 2.5 sen.

AMMB’s share price pared losses after falling to its lowest so far today at RM2.63. At 10:07am, the stock was traded at RM2.88 with some 50 million units changing hands.

At RM2.88, AMMB is valued at about RM8.67 billion based on the group's 3.01 billion issued shares.

Today, the spotlight was also on AMMB structured warrants as prices fell more than 30%.

Among these warrants, at 10:30am, AMBANK-C22 slipped nine sen or 60% to six sen while AMBANK-C23 dropped two sen or 36.36% to 3.5 sen.

From a technical viewpoint on AMMB shares, Hong Leong Investment Bank Bhd analyst Ng Jun Sheng wrote in a note today that the knee-jerk selloff towards RM2.63 to RM2.80 levels provides a good bargain-hunting opportunity for the stock.

At the RM2.63 to RM2.80 levels, Ng said AMMB shares provide an attractive risk/reward ratio for bargain hunting amid undemanding valuations.

At RM2.63, he said AMMB shares trade at a price-book value ratio of 0.44 times for the financial year ending March 31, 2022 versus the Malaysian banking sector’s average of 0.9 times.

"All in all, 1MDB is a legacy issue, and we believe AMMB is capable of weathering the storm and be successful again in rolling out long-term business strategies, rebuilding its image, and eventually shake off any negative perception,” he said.

From a fundamental viewpoint on AMMB, CGS-CIMB Securities Sdn Bhd analyst Winson Ng wrote in a note yesterday that the research firm is projecting a net loss of RM1.77 billion for AMMB and no dividends from the group in the financial year ending March 31, 2021 due to the RM2.83 billion provision for the 1MDB settlement

Ng said CGS-CIMB reiterated its "reduce" call for AMMB shares due to the 1MDB settlement and lowered its target price to RM2.67 from RM2.76 previously.

According to Bloomberg, AMMB has six "sell" calls, four "buy" recommendations, and seven "hold" calls from analysts covering the stock.

Macquarie, which has an "underperform" call on AMMB, has the lowest target price of RM2.50, according to Bloomberg.

Meanwhile, TA Securities Holdings Bhd and KAF-Seagroatt & Campbell Securities Sdn Bhd, which have "buy" calls on AMMB, have the highest target price of RM4, according to Bloomberg.

On Friday, AMMB said in a Bursa filing that the company had reached an agreement with the Ministry of Finance for a sum of RM2.83 billion to be paid towards the full and final settlement, which is also known as the global settlement, in relation to AMMB’s historical matters linked to 1MDB.

"A provision for the payment sum will be established in the final quarter of the company’s financial year ending March 31, 2021. While this will have a material impact on the current year’s profitability, there are adequate capital buffers to absorb this settlement without an immediate need to raise additional equity capital.

"The global settlement is expected to have a material impact on the earnings of the group for the financial year ending March 31, 2021. A provision for RM2.83 billion will be established for the global settlement in the final quarter of the group’s financial year ending March 31, 2021, which will translate to a proforma loss of 93.89 sen per share.

"As a result of the global settlement, the company will not be proposing any final dividends for the financial year ending March 31, 2021,” AMMB said.

On Monday (March 1), AMMB reported its results for the third quarter of financial year ending March 31, 2021 (3QFY21).

AMMB said in a Bursa filing that 3QFY21 net profit fell to RM263.83 million from RM382.15 million a year earlier while revenue dropped to RM2.09 billion from RM2.37 billion.

AMMB said cumulative net profit for 9MFY21 declined to RM866.32 million from RM1.09 billion a year earlier while revenue was lower at RM6.44 billion versus RM7.11 billion.

AMMB’s latest reported net assets per share stood at RM6.50.