Retain NEUTRAL with unchanged target price (TP) of RM5.25
- AOF1 and AOF2 have the primary objective of investing in Grade A and Grade B+ commercial office assets in Central Business Districts (CBDs) of Melbourne, Sydney and Canberra, with secondary focus on Brisbane and Perth. The Group is disposing the 12.42% it owns in AOF1 and 13.70% in AOF2, to be satisfied by cash in RM. Completion of the transaction is expected within 10 days from fulfillment of conditions precedent, amongst which include trustees’ consents and Bank Negara’s approval, by the end of this quarter.
- Proceeds will be utilized to pare down existing bank borrowings and for future working capital requirements, while rationale cited for the transaction is so that it can further streamline and focus on its core banking business. The disposal is expected to generate a net gain of AUD8.2m (c. RM27.1m), though immaterial (+0.8%) to our net profit expectations. We view this move positively however, in line with its rationale as this is a non-core investment, while also benefitting from relatively stronger foreign currency exchange rates at this juncture.