Overseas Chinese Banking Corporation (OCBC Bank)

Ya lor, have to wait till end of Jan to see what's OCBC final play.
I think it would likely take off, just a matter of how many times book value OCBC is paying (looks like 1.7 to 2 times)
and also if its paying by cash, what rights issue with be
or if its paying with cash+shares (lower probability)

Compared to DBS acquisition of Dao Heng bank in 2001 at 3.1x P/B and DBS's failed acquisiton of Bank Danamon in 2012 at 2.6x P/B, OCBC's bid certainly looks "cheap"

I think if OCBC can get it at a fair price of say 1.8x book value, would be great for shareholders. Anything 2x or higher is really not worth it, I would rather they pay our their excess cash(Sale proceeds of APB & FNN) as dividends.

Just for interest...
try searching "Wing Hang" vs "DBS Bank (Hong Kong) f.k.a. Dao Heng bank" within pdf to see the ranking as well as other ratios.

Hong Kong Banking survey 2013 (2.8MB)
http://www.kpmg.com/CN/en/IssuesAndInsig...309-v4.pdf


on DBS Bank (Hong Kong) f.k.a. Dao Heng bank 2001/03
http://en.wikipedia.org/wiki/Dao_Heng_Bank

It seems OCBC is the only interested buyer, why are others not interested in this HK bank ?

Maybe because HK is a very competitive market, low margins(lower than sg banks) and low ROE(9-10%)?

Basically the idea of acquiring a HK bank would be to help spring board into the Chinese Yuen market.

However its said that the Shanghai Free Trade Zone will be ready in maybe 2-3 years time, in which such an acquisition would not be needed if one is willingly to wait.

(07-01-2014, 09:59 PM)felixleong Wrote: Maybe because HK is a very competitive market, low margins(lower than sg banks) and low ROE(9-10%)?

Basically the idea of acquiring a HK bank would be to help spring board into the Chinese Yuen market.

However its said that the Shanghai Free Trade Zone will be ready in maybe 2-3 years time, in which such an acquisition would not be needed if one is willingly to wait.

Shanghai FTZ is readied, and started. Isn't it?

Ya Shanghai FTZ was launched late of last year.

Sorry I meant the establishment of Shanghai FTZ into the main Yuen trading hub within the next 2-3 years time.

In which Shanghai FTZ would also be a very fierce competitor against HK.

Basically you got 2 choice, either do an acquisition to go straight into the Yuen Trading market or
you setup yourself from scratch in Shanghai FTZ which will definitely take a lot of time.

If I didn't recall wrongly GE pays its policyholders 7/8 of all profits (could be wrong if tested by an accountant), not sure if it includes special dividends; shareholders get 1/8 only...

Why each time a Local bank wants to buy another bank in another country, its price will drop?
Looks like the Market is made out of short -term traders much, much more than value investors.

Is there an exception when a Local bank's price rises, when it wants to buy another bank in another country?

Any long-term investor in the market?
How many years then can considered as a long term investor?

And when the Local bank fails in its buying bid, its price will usually rise back to its pre-bidding time(presuming Market index still hovers around the same narrow band).

Shall i buy OCBC now and hope it will fail in its bidding?
(Making a quick buck or for long-term?)

Or buying OCBC after it succeeded in its bidding. (Its price will usually goes down.)

For me:
Actually there are only 3 main considerations.
1) Is Wing Hang bank worth to buy?
2)If it's worth to buy then at what price is it worthy?
3)What's the price i am willing to buy OCBC before OCBC's announcement of buying Wing hang?
If not willing to buy, then why bother now? Is anything change that consider buying?