Concerns over Teh Family's Public Bank stake sale “overdone”: analyst

The estate will dispose of a 13% stake in the Malaysian bank.

Share overhang concerns arising from the Teh Family plan to sell 13% of its stake in Public Bank are “overdone”, according to UOB Kay Hian.

In October 2024, the Teh Family– whose late patriarch Teh Hong Piow established Public Bank in 1965– announced their plan to reduce their stake in the bank to just 10%. This is in line with regulations stating that an individual can only hold up to a 5% stake in a bank or a 10% stake with central bank approval.

The effects of the planned stake sale are expected to be manageable, with UOBKH noting that the Teh family’s commitment to retaining a stake will ensure cultural and managerial continuity.

“Assuming the 13% stake disposal is spread out over a five-year period, the disposal would represent a manageable 9% (2 million shares) of Public Bank’s daily average trading volume (22 million shares),” said UOBKH analyst Keith Wee Teck Keong.

Wee also noted that AMMB and RHB saw their share prices rebound within 1-2 months following past stake sales.

Public Bank saw its net profit rise by 12.4% year-on-year (YoY) to MYR1.91b in Q3 2024. This brings its 9M 2024 earnings to MYR5.34b, placing it slightly ahead of expectations at 77% of full-year forecasts.

“We raise our 2024 earnings by 2% to reflect the [third quarter] net provision write-backs, lowering our 2024 net credit cost assumption to 2 basis points,” Wee said.