EIIB (EIIB:LN) – The Strongest Bank in the World? (Part II)

Tags

activist investors, DiamondCorp, EIIB, Equity/Total Assets, HBG Holdings, Margin of Safety, Sharia'a, sukuk, value investing

European Islamic Investment Bank (EIIB:LN)

Mkt Price:  GBP 3.625p

Mkt Cap:  GBP 64.0 mio

Equity/Total Assets Ratio:  69.2%

P/B Ratio:  0.45  (adjusted)

P/C Ratio:  0.59  (adjusted) 

Fair Value:  GBP 8.09p

Upside Potential:  123%

Continuing from my previous EIIB post:     Let’s not forget that EIIB is a bank. Why am I re-stating the obvious? Well, I know it seems like banks are ten a penny (actually true in the US, with a recent count of 6,500 banks, if you can believe it!), but a new banking licence in the UK is a pretty rare thing. Especially an Islamic banking licence. I’ve no real idea of how much that’s worth, but it’s certainly a valuable intangible that isn’t listed anywhere on the B/S. EIIB presents a cheap entry to any financial institution who’s contemplating entering (or bulking up) in the UK and/or the Islamic finance market. When you consider the strength of EIIB’s B/S, the FSA licence (which would otherwise take at least a year to obtain) and the potential business contacts/opportunities gained, why not pay a premium to Book in a takeover situation? One should also consider the leverage potential implied – EIIB could almost quadruple its B/S, still be considered a very safe bank (with a near 20% Equity/Total Assets Ratio) and presumably achieve a radical transformation of its P&L and Return on Equity. Nobody’s cup of tea right now, and not a strategy that is being signaled by the company, but still something to consider…

EIIB (EIIB:LN) – The Strongest Bank in the World?

Tags

DiamondCorp, EIIB, Equity/Total Assets, Goldman Sachs, Margin of Safety, Price/Book, Price/Cash, Sharia'a, sukuk, Tier 1 Capital, value investing

European Islamic Investment Bank (EIIB:LN)

Mkt Price:  GBP 3.75p

Mkt Cap:  GBP 66.2 mio

Equity/Total Assets Ratio:  69.2%

P/B Ratio:  0.46  (adjusted)

Price/Cash Ratio:  0.61  (adjusted) 

Congrats if you guessed I was referring to the European Islamic Investment Bank in my last post! EIIB’s the first independent Sharia’a compliant  Islamic bank authorized by the FSA. Headquartered in London, EIIB offers Sharia’a compliant treasury, investment, private equity and investment banking services. Established in early 2005, their FSA authorization process took a little over a year to complete. The bank then immediately opened up for business, following up with an IPO a month later. Fortunately, these were the boom times (aah, remember those days..?!) and they raised an impressive  GBP 183 mio of Equity from a private placing and their IPO.