06 May 2012

OSK Holdings : Week 18 (30 April-4 May) Stock Picks Commentary

Stock Picks #2
OSK Holdings Berhad (OSK)

Week high : RM 1.74 (Up 18 sen – 11.5%)

On 27 April, OSK Holdings announced that it has obtained Ministry of Finance’s approval for the proposed merger with RHB Capital.

Earlier on the same day, OSK CEO has U Chen Hock indicated that OSK has yet to receive go-ahead from Bank Negara and may take up to 4 to 6 months to finalise the deal once approval is obtained.

Market reacted positively as the merger is seen to potentially be beneficial to OSK shareholders even though the pricing valuations and way of settlement (cash or shares) are not yet determined and agreed by both parties.

This merger is attractive and important to RHB as it would place them as the country’s largest stockbroking firm with nearly 15% market share if the merger goes through.

Do take note that on 24 June 2011, negotiations on potential merger exercise between RHB and Maybank and CIMB was called off due to wide gap in price expectations. Maybank and CIMB were not willing to pay 2.25 times book value of RHB Cap.

OSK stock rose 11.5% (18 sen) since 27 April to week’s highest RM 1.74 on 2 May and closed at RM 1.69 at the end of this week.


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