KUCHING: Year-on-year increases in OSK Holdings Bhd’s (OSK) group revenue and net profit are expected to be strong this year, supported by further improvements in the investment banking operations locally and overseas.
For the three months ended March 31, the regional investment banking group posted a 24-per cent increase in revenue to RM304.039 million versus the RM245.463 million reported in the corresponding period last year.
Pre-tax profit for the quarter under review was RM73.207 million, a rise of 26 per cent against last year’s RM58.186 million.
“First quarter results were within our expectations, reflecting stronger performances at OSK’s investment banking as well as loan and financing divisions,” said analysts at Netresearch-Asia Sdn Bhd (Netresearch) yesterday in a research note.
“Looking ahead, we expect further improvements in group revenue and profit to be supported by higher contributions from operations in OSK’s investment banking division, both locally and overseas.”
Notably, the research house’s take on OSK appeared to be strengthened by the latter’s recent entry into a conditional share purchase agreement (SPA) with Bangkok First Investment and Trust (BFIT).
The SPA, undertaken via its investment banking arm OSK Investment Bank Bhd (OSK Investment) on April 1 this year, involved the acquisition of 48.87 per cent equity interest in BFIT Securities for an indicative cash purchase consideration of 1.032 billion Thai baht (approximately RM103.2 million).
Upon completion, OSK Investment would emerge as the single largest shareholder of BFIT Securities, exceeding 25 per cent of total voting rights in it. As such, OSK Investment would be obliged to make a tender offer for the remaining BFIT Securities’ shares pursuant to rules issued by the Securities and Exchange Commission of Thailand.
“Based on our estimates, the potential total cost for a successful takeover of a 100-per cent equity interest in BFIT Securities could be RM211 million, subject to adjustments,” opined Netresearch.
It also added that the proposed acquisition would be in line with parent OSK’s plans to become a leading investment banking and financial services group in the region.
“In addition to presence in Malaysia, Singapore, Hong Kong, China, Indonesia and Cambodia, the proposed acquisition of BFIT Securities, which had a market share of 1.2 per cent in 2010, will pave the way for OSK’s entry into Thailand with immediate access to the kingdom’s financial markets – including licences, clientele base, platforms, talents and market position.”
Assuming completion of the proposed acquisition of BFIT Securities and the tender offer for its remaining shares not owned by OSK after the SPA by end of this year, Netresearch estimated that the whole inclusion of BFIT Securities by the next financial year should lead to two to three per cent uplift in OSK’s group revenue and pre-tax profits.
“We continue to like the group’s growth potential both locally and regionally, to be strengthened by efforts in expanding its investment banking and treasury businesses,” the research firm affirmed.