Public Bank rises after announcing four-for-one bonus issue

Public Bank rises after announcing four-for-one bonus issue
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KUALA LUMPUR (Dec 9): Public Bank Bhd’s share price rose more than 6% in Bursa Malaysia morning trades today after the group announced yesterday its proposed bonus share issue on the basis of four bonus securities for one existing unit held.

At 9:02am today, Public Bank rose RM1.24 or 6.72% to RM19.70.

At RM19.70, Public Bank has a market capitalisation of about RM76.44 billion based on its number of issued shares of 3.88 billion units.

Yesterday, Public Bank said in a Bursa filing that the bonus issue will entail the issuance of up to 15.53 billion bonus shares on the basis of four bonus shares for one existing share held by entitled shareholders whose names appear in the record of depositors of the company at the close of business on the entitlement date to be determined and announced later.

"The proposed bonus issue aims to reward the existing shareholders of the company for their loyalty and continuous support.

"The proposed bonus issue will not have any effect on the consolidated earnings for the financial year ending Dec 31, 2020, save for the potential dilution in EPS as a result of the increase in the number of Public Bank shares in issue arising from the proposed bonus issue,” Public Bank said.

Today, Hong Leong Investment Bank Bhd (HLIB) analyst Chan Jit Hoong wrote in a note that post-Public Bank’s bonus issue, HLIB’s target price (TP) for Public Bank shares will be lowered to RM3.95 to reflect the enlarged share base. 

"We are positive on this exercise as it will enhance liquidity and marketability of its shares, although theoretically, there are no fundamental changes,” Chan said.

MIDF Amanah Investment Bank Bhd analyst Imran Yassin Yusof wrote in a note today that MIDF’s theoretical ex-bonus TP for Public Bank shares is RM4.10.

The theoretical ex-bonus share price of Public Bank is approximately RM3.593 based on the five-day volume-weighted average price of the stock, according to Imran Yassin. 

"We view the bonus issue as positive. Besides rewarding shareholders, we opine that this will improve liquidity and affordability of the stock,” Imran Yassin said.