Monday, August 8, 2011

MBSB ... Aug11

The EPF has not made any decisions to divest its stake in Malaysia Building Society Bhd (MBSB). The EPF said it is comfortable with the present performance of MBSB and looks forward to continuing improvements in their financial results.

Its stake in MBSB stood at 65.5%. After EPF, the second largest shareholder of MBSB is Permodalan Nasional Bhd, with a 11.9% stake.

MBSB is an exempt finance company, a status granted by the Finance Ministry on March 1, 1972, which allows it to carry on a finance business without a licence.

EPF's stake in MBSB has been in the news lately after it was revealed at the Economic Transformation Programme update in July 2011 that 33 government-linked companies were part of a divestment plan, that included the paring down of stakes in five companies, the listing of seven and outright sales of the remaining 21.

MBSB, Malaysia Airlines and Malaysia Airports Holdings Bhd are among those identified as candidates for government-linked investment companies to reduce their shareholdings.

If EPF pared down its stake, MBSB would gain from the improve liquidity in its shares.

Market observers also say EPF should hold on to its stake in MBSB as the latter has “just started to turn around” and needed “a shareholding backing it up to elevate it to a stronger footing.”

There are still things that needed further improvement, like its legacy loans, although it has been positively progressing. On the other hand, MBSB could do with a strategic investor such as consumer credit institution to catapult it to a the next level. MBSB can issue new shares to the strategic investor so that it will have bigger capital for better growth.

Since 2009, MBSB has undertaken a major reform from being a traditional mortgage provider to become a dynamic institution offering more products for the retail and corporate sectors.

For its six-month performance, MBSB net profit reached RM146.5mil from RM92.7 while revenue climbed to RM630.2mil from RM345.2mil a year ago.

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