What is cheap? When it could get cheaper the next day and then the following day cheaper still. Still as an investor you have to make a stand, make a call.
I wasn't interested at Bumi-Commerce at RM9.00, not even RM8.50, but at RM7.60 its looking mighty appealing. Let's look at some figures:
P/NTA 2.4x
2007 PER: 9x
2008 PER: 9.7x (absorption of Thai bank)
ROE 2007: 20%
ROE 2008: 16%
The Thai bank stake acquisition while a bit pricey at p/nav of 2.9x is still much better than Maybank's recent purchases, and makes more sense. Bank Thai is the 9th largest bank in terms of assets with 147 branches. Post recapitalisation, the purchase price would be 2.3x adjusted NAV. It had some losses in CDOs hence they were open to Bumi-Commerce's entry. The CDO's exposure had been written down already. At least Bumi-Commerce is showing the right culturally correct way to make a regional acquisition, take note Temasek.
p/s photo: Patty Hou Pei Chen
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