KUALA LUMPUR: Glove companies particularly Top Glove Corp Bhd overtaking Malayan Banking Bhd (Maybank) as Bursa Malaysia's top company in terms of market capitalisation (market cap) is unlikely to happen.
But Public Bank Bhd, for so long being second best, may just be the one to dislodge Maybank.
Analysts said the prospect seemed imminent following Public Bank's proposed four-for-one bonus issue.
As Top Glove's market cap shrinks by some RM16.52 billion since the first trading day of November, analysts said Public Bank's bonus issue had made the stock more attractive and "cheaper".
Analysts said the exercise would increase the trading liquidity of Public Bank shares.
"The lower share price post-bonus issue will be perceived by retail investors as being more affordable. Public Bank chasing Maybank as champion market cap could happen in the next few weeks," said an analyst.
At over RM21, Public Bank's share price was expensive, the analyst added.
Public Bank had on December 8 announced that it would issue four new shares for every one existing share.
This will increase the total number of shares from 3.9 billion currently to 19.4 billion after the bonus issue.
Hong Leong Investment Bank Bhd (HLIB) said the bonus issue would make Public Bank's share price point more appealing, while enhancing its trading liquidity and marketability.
HLIB has revised its target price on Public Bank to RM3.95 following the enlarged share base and expects the exercise to be completed by the first quarter of 2021.
At closing of RM21.30 today, Public Bank's market capitalisation was RM17.36 billion off Maybank's RM100.05 billion market cap.
Top Glove's market cap on Monday stood at RM51.64 billion or 24.43 per cent lower from RM68.33 billion on November 2.
Technically, Public Bank's share price need to increase to about RM25-RM26 to surpass Maybank's market cap.
Maybank closed one sen lower or 0.11 per cent on Monday at RM8.90, while Public Bank closed 60 sen lower or 2.74 per cent at RM21.30.
CGS CIMB Research, in a recent report, raised its target price for the bank from RM20.50 to RM25 a share, citing the bank's defensive qualities amid the pandemic and improved trading liquidity as key drivers for the upgrade.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the negative connotation surrounding Top Glove of late would derail the company's path to dethrone Maybank.
He said it was possible for Public Bank to surpass Maybank's leading position by end of 2020.
"Meanwhile, with many investors pinning their hope on the expected recovery next year, it seems like investors are entering into banking stocks ahead of any expected positive economic data in the coming quarters.
"So in the banking sector, Public Bank could be a potential candidate to overtake Maybank," he told the New Straits Times on Monday.
Meanwhile, HLIB believes the KL Finance Index was poised to finish strong in the second half of 2020 as investors were in "risk on" mood amid Covid-19 vaccine discovery.
Hence, it said all banks had displayed positive returns, on a relative basis.
"We believe certainty of an economic recovery has increased, since leading Covid-19 vaccines have high efficacy rates, indicating a step closer to winning the war against the virus," it said.
HLIB has maintained its "overweight" stance on the banking sector with top picks include Maybank (target price: RM9.45), over Public Bank (target price: RM21.70) and CIMB Group Holdings Bhd (target price: RM4.35).