Equity analysts on Thursday said that the recent purchases of more RCBC shares by its major shareholders were aimed at salvaging the bank’s battered valuation amid its alleged involvement in the money laundering controversy.
On Thursday, RCBC closed at P31.50 per share, significantly lower than the P45.70 per share a year ago.
Lexter Azurin, head of research at Unicapital Securities Inc. said that the recent moves of RCBC’s shareholders’ in boosting their respective interests in the bank were mainly meant to support the bank’s already battered share prices.
“It [the buying of more shares]tells you that in a way, major shareholders are supporting its [RCBC] share prices at this level. It has been undervalued and it is now trading well below its fair value,” Azurin said.
Azurin noted that although the buying of more RCBC shares by its major stockholders were aimed at strengthening its share prices, the goal was not completely attained because of profit taking.
“The increase in share prices was not as significant as it should have been because it [the movement in price]was a combination of buying and profit taking,” he said.
He said that with the recent high at P33 from the trading low of P28.75 a few weeks ago, investors took advantage and booked gains after RCBC’s stock price shot up during the week.
Further, he explained that except for its ongoing crisis, the bank’s fundamentals would point toward profitability in favor of the stockholders.
“They [RCBC] are doing very well. Thus, given its valuation at present, long-term investors may start buying RCBC shares. The strong fundamentals are there, it has just been battered by recent [Senate] investigation,” Azurin said.
He said that the fallout from the recent $81 million heist and money-laundering that the bank is facing should only have a short-term impact on its financial position given its strong performance last year.
Last year, the bank’s earnings grew by 15 percent to P5.1 billon, from the P4.4 billion posted in 2014.
“Moving forward, it [RCBC] is a good investment, and it is now at an attractive price level. Thus, for long-term investors, it is now time to accumulate RCBC shares,” he added.
Earlier this week, it was reported that Taipan Alfonso Yuchengco and Cathay Life Insurance Co. Ltd. of Taiwan bought more shares in RCBC.
Yuchengco’s Pan Malayan Management and Investment Corp. augmented its stake in RCBC to 42.31 percent from 41.68 percent.
The holding company bought 8.8 million shares of RCBC at P30 each for P264 million last April 1. This brought the number of RCBC shares owned by the company to 592.25 million shares from 583.45 million shares.
Meanwhile, Cathay Life Insurance increased its shareholdings in the bank to 22.71 percent from 22.29 percent.
Cathay Life purchased 5.8 million shares of RCBC at P30 apiece for P174 million on March 31.
Luis Limlingan, business development head at Regina Capital Development Corp., explained that since RCBC’s book value is at P45 and the shares are now trading at the P31.50-level, RCBC shares have become “very cheap.”
“Thus, its major shareholders want to boost its price from this level,” Limlingan said.
He said that prior to its scandal, Regina Capital recommended the buying of RCBC shares to its clients.
“There was selling pressure after the [money-laundering] scandal broke out. Now, RCBC’s share prices and whether we would recommend buying its stock would depend on the outcome of the investigation. But again, the bank has a strong financial position and its fundamentals are strong,” he said.