KUALA LUMPUR (Apr 27): Shares in RHB Capital Bhd dipped as low as 0.25% or 2 sen at RM7.98 in the morning trades on recent feature in The Edge Weekly, which quoted its managing director Kelle Kam as saying that it has revised down its overseas contribution to 20%, from 30%.  

At 11.46am, RHB Cap (fundamental: 1.5; valuation: 2.1) inched 1 sen higher at RM7.99, with 10,900 shares changing hands, valuing it at RM20.55 billion.

In a note to clients today, CIMB Research wrote that it is positive that RHB Cap — under its IGNITE2017 programme — can improve the areas that it is weak in traditionally, such as Islamic banking, small and medium enterprise (SME), treasuries and wealth management.

In the interview with The Edge, Kam said RHB Cap would not embark on merger and acquisition (M&A) activities in the near term given the unfavourable environment.

“The focus [on expanding overseas] will be on a less capital-intensive route. There is a possibility that the investment bank will be used to spearhead that. A regional bank makes the most sense for our investment banking platform to capitalise on flows.

“In our mind, it doesn’t make sense to push for 30% in the current environment,” Kam was quoted as saying, adding that the two missing markets are Indonesia and the Phillipines.

Nevertheless, CIMB Research is still intact with an add call, assigning a target price of RM10.50 in the long run, based on its dividend-discount model.

“Stay invested in view of the group’s bright earnings prospects, arising from its swift loan and fee income growth,” the research house said.

(Notes: 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.)