CIMB Quick Takes – Bank Panin – To be or not to be

Maintain Outperform on Panin. The central bank’s newly pitched idea of capping majority ownership, especially that of foreigners, to 30% individually could sound like music to Bank Panin’s founder's ears, whose intention to sell a majority stake might have been deterred by ANZ’s 38% overhanging block. Given that most regulations in Indonesia are non-retroactive, the lead time from the crafting of regulations could provide a window to ANZ to decide on the fate of its stake. Its options could include topping up the stake to majority level or selling down. Either option would appear to benefit the founder, in our assessment. We maintain Outperform on Panin on a regulatory-driven higher chance of its majority stake being sold in the near term, which could trigger a tender offer from a control change. Our target price has been kept at Rp1,420, a 20% discount to the average 2008-09 M&A valuation of 3.6x trailing P/BV. More progress in the drafting of new regulations could offer catalysts for the stock, in our view.