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The High Court has ruled that a vote by EON Capital’s shareholders last year in favour of the RM5.06 billion Hong Leong Bank takeover is valid.

Banking group EON Capital Bhd (EONCap) (5266) has managed to clear one of two legal hurdles hampering its takeover by rival Hong Leong Bank Bhd.

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The High Court yesterday ruled that a vote by EONCap shareholders last year in favour of the RM5.06 billion takeover is valid.

EONCap’s biggest shareholder, Primus (M) Sdn Bhd, which is against the takeover, had in October filed a summons with the court, asking that resolutions reached at a September 27 shareholder meeting be declared null and void, citing technicalities.

At that meeting, an estimated 97 per cent of shareholders were present and voting had been in favour of the takeover. Primus did not vote.

Its representative, who had wanted the bank’s chairman to adjourn the meeting since another lawsuit filed by Primus in June was ongoing at the time, had walked out of the meeting ahead of the vote.

Judge Anantham Kasinather, who had presided over the case, ruled that the chairman’s failure to put a motion for adjournment was only a “procedural breach” and that the rights of the members had not been compromised, thus rendering it a valid meeting.

“I decline to make any of the other declaratory orders sought by the plaintiff (Primus),” he said.

With that hurdle out of the way, EONCap is now left with just one other lawsuit to deal with.

Hong Leong’s takeover offer is dependent on the result of the lawsuit.

Primus is suing the bank’s directors for RM1.1 billion, claiming the takeover offer is unlawful in the way it is structured and that the directors have not acted in the best interest of the company.

Primus is against the Hong Leong takeover as the offer price at RM7.30 a share is much lower than its entry price of RM9.55 a share.

Analysts voiced hope that the court case will be concluded soon given that the takeover saga has dragged for over a year now.

“It is encouraging to note that the last court hearing date is still set for March 1 2011, despite additional court hearing dates being announced,” AmResearch said in a note.

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PUBLIC Bank Bhd (1295), the country’s third largest lender, saw net profit rise by 21 per cent to a record last year and said it can probably maintain a similar growth rate this year despite stiffer competition.

“Given the healthy economy that is expected for this year, we expect a similar magnitude of earnings growth can be achievable, barring unforeseen circumstances,” its chief operating officer Leong Kwok Nyem told reporters at a financial results briefing yesterday afternoon.

The group, which expects the Malaysian economy to expand by as much as 6 per cent this year, is also targetting to maintain its annual return on equity (ROE) at 27 per cent in the next two to three years.

ROE, a measure of how well re-invested earnings are used to generate additional earnings, improved to 27.1 per cent last year from 26.1 per cent the year before.

The group’s fourth quarter net profit last year rose by 25 per cent to RM846 million, its highest quarterly earnings ever.

This brought net profit for the full year to RM3.05 billion compared with RM2.52 billion in 2009. Revenue improved by 13.6 per cent to RM11 billion. The results came in within analysts’ expectations.

Chairman Tan Sri Teh Hong Piow, in a press statement, said the improved performance last year was mainly due to better income from loans, and higher fees from businesses like unit trusts. It had also set aside less money to cover potential bad loans.

The group’s earnings from overseas rose by 30 per cent, helped by a marked improvement in its Hong Kong operations.

It expects to achieve a lending growth of between 14 per cent and 15 per cent this year, after a 13.8 per cent growth to RM156.5 billion last year.

Public Bank, the market leader for consumer loans, may see a small contraction in net interest margins this year as rivals price loans more competitively, managing director Tan Sri Tay Ah Lek said.

He, however, expects the impact on the group’s earnings to be mitigated by hikes in the Overnight Policy Rate that may come in the second half of the year.

Bank Negara Malaysia may raise the OPR, which stands at 2.75 per cent now, by between 25 and 50 basis points in the second half, he said.

Analyst Eileen Tan of Affin Securities expects the group’s net profit to expand at a slower rate of 10 per cent this amid stronger competition and a moderating economy. Economic growth is widely expected to slow down from a possible 7 per cent growth last year.

Meanwhile, Leong ruled out merging with any other bank in Malaysia, saying the group’s position remained strong.

“Our domestic loan growth grew by about 16 per cent last year, adding close to RM20 billion of loans to the balance sheet. That’s almost the size of a small bank,” he remarked.

The group will continue with its organic growth strategy at home and abroad, with plans this year to add three more branches each in Hong Kong and Shenzhen, as well as some in Cambodia.

Public Bank’s overseas operations are set to account for a tenth of its net profit in two to three years’ time compared with 8 per cent now, Tay said.

On dividends, the group declared a second interim cash dividend of 25 sen less tax and a single tier dividend of 8 sen.

This brings the total net dividend for 2010 to RM1.59 billion, or 52 per cent of the group’s net profit for the year. It expects to maintain a payout ratio of between 50 per cent and 53 per cent this year, Leong said.

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Benalec Holdings Bhd, an integrated marine construction and vessel chartering services provider, made a strong debut on Bursa Malaysia’s Main Market with a 36 sen premium over its offer price of RM1 per share.

At the opening bell, a total of 8.6 million Benalec shares were traded.

“We are happy with the (opening) share price of RM1.36 and feel quite confident of doing much better in future,” managing director Leaw Seng Hai said at a press conference after its listing ceremony yesterday.

Benalec shares ended at RM1.34 on a volume of 101 million units and a market capitalisation of RM978.2 million.

The company has raised some RM100 million from the exercise.

Benalec is the second company to be traded on the Main Market this year with both companies showing a healthy premium debut.

Maxwell International Holdings Bhd – a Chinese-based sport shoemaker – was listed first, gaining 4.6 per cent at the opening bell from its offer price of 54 sen per share. It ended its maiden day at 56.5 sen.

Elaborating on its operations, Leaw said Benalec is in the midst of obtaining the building and construction authority licence from the Singapore government to enable it to bid for land reclamation projects in the republic.

“Hopefully, we can get the licence within the next one to two months. At present, our concentration is more on our projects in Penang, Malacca and Johor. We also plan to explore more overseas projects in the future,” he added.

The company currently has an orderbook of RM855 million. Of this, about RM664 million is in unbilled orders that will last it until 2016. It is said to hold an 18 per cent share of the marine construction market.

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