LPI Capital Bhd remains a strong contender in the financial services sector, maintaining its BUY recommendation and an unchanged target price of RM14.52, following the recent announcement of the Public Bank's acquisition of a 44.15% stake in the company. The acquisition, which involves 175,896,000 shares held by the estate of the late Tan Sri Datuk Sri Dr Teh Hong Piow and Consolidated Teh Holdings Sdn Bhd, is set to trigger a mandatory general offer (MGO) for the remaining shares for RM9.80 per share. However, this offer is perceived as unattractive due to its steep discount to LPI Capital's current market price of RM13.00.

The RM9.80 offer price represents a 24.6% discount based on the share's closing price prior to the trading suspension and a 23.7% discount on its five-day volume-weighted average price (VWAP) of RM12.84. Additionally, the offer implies a price-to-book value (P/BV) of 1.71x, which is lower than LPI Capital's existing P/BV of 2.3x. Given these figures, MIDF Amanah Investment Bank Bhd (MIDF Research) believe that minority shareholders are unlikely to show interest in the MGO, particularly when the current market price presents a more favourable exit option.

Despite the unattractive offer, LPI Capital is regarded as fundamentally strong, boasting a solid dividend yield that reflects its financial health. MIDF Research argue that the offer price does not accurately represent the company's fundamentals, which remain robust. The anticipated synergies from being part of a larger banking group could provide opportunities for growth in the future, although the current proposal has not sparked much enthusiasm among shareholders.

The research house has opted to keep its earnings forecasts unchanged, citing potential risks that could impact LPI Capital's performance, such as weak investment results, increased claims, and slower growth in gross written premiums. Nevertheless, LPI Capital's outlook remains positive, with its solid fundamentals and attractive dividends continuing to appeal to investors. The bank maintains a target price based on a forecasted FY25F P/BV of 2.42x, projecting an expected share price return of approximately 11.7%, alongside a dividend yield of 6.0%. This leads to a total expected return of 17.7%, reaffirming LPI Capital's position as a compelling investment opportunity in the finance sector.