Potential merger between Affin and AMMB could expand share base significantly, says CIMB Securities

AI Summary

CIMB Securities analyzes a potential merger between Affin Bank and AMMB Holdings, predicting significant share dilution. Two scenarios are considered: Affin acquiring AMMB or vice-versa, both requiring substantial new share issuance. If Affin acquires AMMB at a 1.0 P/BV, Affin's shares would increase dramatically. If AMMB acquires Affin at a 1.0 P/BV, AMMB's share base would still increase significantly, potentially lowering its target price. A lower acquisition price for Affin might be more appealing for AMMB but could be unacceptable to Affin's minority shareholders. Recent rumors of Sarawak government involvement have been denied.