KUALA LUMPUR (Dec 28): LPI Capital Bhd is planning to distribute the gains from the sale of its 0.06% stake in Public Bank Bhd amounting to RM37.1 million, to its shareholders in the first quarter of 2016.

In a Bursa Malaysia filing today, LPI Capital said it sold 2.5 million shares, or a 0.06% stake, in Public Bank via the open market for RM45.99 million cash or RM18.3958 per Public Bank share.

This leaves it with another 52.24 million shares or a 1.35% stake in Public Bank. Both LPI Capital and Public Bank have a common controlling shareholder in Tan Sri Teh Hong Piow.

“The disposal is expected to result in a gain of approximately RM37.1 million, which translates [in]to an increase in earnings per share of approximately 11.17 sen per share for LPI Capital’s financial year ending Dec 31, 2015 (FY15),” said LPI Capital.

The insurance group said its original cost of investment in the banking stock was RM14.8 million — less than half of the gross gains it made today. LPI Capital added that it has held the Public Bank shares since 1999.

"The rationale of the disposal is to realise tax-exempt capital gains and to support business growth.

"The sale proceeds will be used to pay cash dividend to LPI Capital's shareholders in the first quarter of 2016, and the balance will be placed into fixed deposit to generate interest income," it said.

The net profit attributable to the disposal is RM1.3 million, while the net assets of the disposal is RM45.99 million.

Bloomberg data showed that Public Bank’s counter averaged at RM1.172 in 1999. This compares with its closing price today of RM18.38.

LPI Capital was today’s third biggest gainer on Bursa Malaysia, closing 36 sen or 2.32% higher at RM15.86. The insurance provider is valued at RM5.27 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)