Overseas Chinese Banking Corporation (OCBC Bank)

Well, the Today news report seems has different P/B value. I didn't explore further, may be due to different version of the book value, either latest or last FY value.

OCBC Bank to acquire Wing Hang Bank with HK$125 cash offer per share

SINGAPORE — Oversea-Chinese Banking Corp (OCBC Bank) has made an offer representing over two times the audited consolidated net asset value of Wing Hang Bank with an offer of HK$125 (S$20.27) per share in cash, according to a joint-statement issued by the two banks today (April 1).

This comes following exclusive talks with Wing Hang’s biggest shareholders as the Singapore bank moves seeks to gain a much sought-after gateway to China, as it rushes to bridge the gap with bigger Singapore rival DBS Group Holdings, which operates Hong Kong fifth-biggest bank.

OCBC Bank and Wing Hang shares were suspended from trading on March 31 in Singapore and Hong Kong, with Wing Hang trading at HK$123 each and OCBC Bank at S$9.51 per share, after OCBC secured preliminary approval from the Hong Kong’s banking regulator for the deal.

The final deal is worth about a total of S$6.234 billion, OCBC Bank said in a statement today.

http://www.todayonline.com/business/ocbc...ffer-share

Seems like the higher risk undertaken by the bank is already priced in. Good support for the share price. Happily vested.

(01-04-2014, 09:32 AM)yeh Wrote: OCBC didn drop much today? surprised...

market was expecting OCBC to over pay, like 1.9-2 times book value for wing hang but instead they are only paying 1.77 ... still expensive but not as much as what analyst were expecting... however price may remain ranged bound until they reveal details on the funding via debt/equity mixture

they will probably need like 3 bil from rights, which is 1/10 addition market cap. I feel that a 1 for 10 rights or 2 for 10 rights at 10% discount to avg market price feels just about right, quite absorbable by retail investors, but still savvy investors will apply for excess

(01-04-2014, 09:49 AM)Freenasi Wrote: Seems like the higher risk undertaken by the bank is already priced in. Good support for the share price. Happily vested.

technically 9.50 is a strong support as institutional investors will accumulate

(01-04-2014, 09:48 AM)CityFarmer Wrote: Well, the Today news report seems has different P/B value. I didn't explore further, may be due to different version of the book value, either latest or last FY value.

OCBC Bank to acquire Wing Hang Bank with HK$125 cash offer per share

SINGAPORE — Oversea-Chinese Banking Corp (OCBC Bank) has made an offer representing over two times the audited consolidated net asset value of Wing Hang Bank with an offer of HK$125 (S$20.27) per share in cash, according to a joint-statement issued by the two banks today (April 1).

This comes following exclusive talks with Wing Hang’s biggest shareholders as the Singapore bank moves seeks to gain a much sought-after gateway to China, as it rushes to bridge the gap with bigger Singapore rival DBS Group Holdings, which operates Hong Kong fifth-biggest bank.

OCBC Bank and Wing Hang shares were suspended from trading on March 31 in Singapore and Hong Kong, with Wing Hang trading at HK$123 each and OCBC Bank at S$9.51 per share, after OCBC secured preliminary approval from the Hong Kong’s banking regulator for the deal.

The final deal is worth about a total of S$6.234 billion, OCBC Bank said in a statement today.

http://www.todayonline.com/business/ocbc...ffer-share

think the news reports were confused

The proposed acquisition values WHB at 1.77x price
to book (Dec’13 book value), below recent market
expectations of about 1.9-2x.

OCBC announcement also states 1.77 times book value


However I suspect the price was leaked in HK already, winghang actually drop $1 today to 122... was previously 123 very close to the 125 offer...we retail investors are always at an disadvantage... the insiders always knows the final price

With the acquisition, the profile of OCBC will change quite dramatically.

OCBC has essentially became 120% of its old size (since WingHang is ard 1/5 OCBC's size), and given that Winghang has a 30% exposure to HK/China property loans, expect greater sensitivity to news on China credit/pmi/slowdown expectations.

The profile of the geographical contributions will change a fair bit as well with Sg/Asean/Greater China now roughly ard 70//15//12.

Now that the price is confirmed, execution is key to integrate ops but Samuel Tsien's Greater China intention is clear since taking over with the WingHang purchase + increase in Ningbo stake.

I don't think an approach of extrapolating from the past into the future (i.e. OCBC has done well in the past hence i will double down) is sensible - the past was Sg+ASEAN+GE under Connor - the future is likely going to be a greater China focus under Tsien.

Perhaps the better thing to do is to evaluate your portfolio and asking if you want a greater china exposure in your books. I will think adding OCBC into a ptf heavily weighted with CapitaLand (which just disposed of AustraLand) e.g., to be an overweight into the China growth theme rather than diversification.

Given how Ocbc, under connor, managed to integrate BOS and managed to triple their AUM from 2010, hopefully, they can do this just as well.

(01-04-2014, 10:29 AM)felixleong Wrote:

(01-04-2014, 09:49 AM)Freenasi Wrote: Seems like the higher risk undertaken by the bank is already priced in. Good support for the share price. Happily vested.

technically 9.50 is a strong support as institutional investors will accumulate

My entry price is also 9.50. (Missed the bottom)
Added OCBC because I wanted some exposure to Banks and China market, and it was an opportunity to buy when the market views the acquisition negatively.
If the discount is good, I will probably apply for excess rights too.

Singapore Exchange Overseas Exchange
Date of Purchase 01/04/2014
Total Number of shares purchased 200000
Number of shares cancelled 0
Number of shares held as treasury shares 200000
Price Paid per share
Price Paid per share SGD 9.56 SGD 0
Total Consideration (including stamp duties, clearing changes etc) paid or payable for the shares SGD 1,913,852.83 SGD 0
Section B
Purchase made by way of off-market acquisition on equal access scheme No
Section C
Cumulative No. of shares purchased to date Number Percentage
By way of Market Acquisition 10720000 0.321
By way off Market Acquisition on equal access scheme 0 0
Total 10720000 0.321
Section D
Number of issued shares excluding treasury shares after purchase 3434641879
Number of treasury shares held after purchase 6535006

share buy back by OCBC ....

NEWS analYSIS
Promising signs in OCBC's HK deal

Published on Apr 02, 2014

It should be noted that OCBC is offering 1.77 times Wing Hang's book value, while DBS paid more than three times Dao Heng's book back in 2001. OCBC is also looking to enter Hong Kong, the biggest Chinese yuan hub in the world, just as offshore trading and use of the yuan is exploding. -- PHOTO: BLOOMBERG

By Yasmine Yahya Finance Correspondent

THE deal was made over a decade ago yet the price tag was so spectacular that a "comparison question" was inevitable, but OCBC chief executive Samuel Tsien took it in his stride.

The query to him, at a briefing yesterday, centred on why OCBC felt confident about splashing out billions in Hong Kong when its bigger rival DBS' deal failed to live up to the hype.

OCBC is offering HK$125 a share, or HK$38.4 billion ($6.23 billion) in total, for family-run Wing Hang Bank.

It all sounded worryingly familiar to investors of a certain age, who can well recall DBS' $10-billion takeover of Hong Kong's Dao Heng Bank in 2001.

That acquisition has cost Singapore's biggest lender at least $2.1 billion in writedowns.

If OCBC's planned takeover succeeds and assuming it is completed in the second half of this year, the lender will have to prove within a little over two years that Wing Hang is no Dao Heng.

It has forecast that a takeover of Wing Hang would lift return on equity and earnings per share by 2017.

Mr Tsien sidestepped the comparison question at a briefing yesterday, saying he would not comment on DBS' situation but he did say that the business environment in Hong Kong and Greater China is very different today from a decade ago.

"The economic situation in Hong Kong, and particularly Wing Hang Bank's current presence in the parts outside Hong Kong, has got significantly more business opportunities for us than if you looked at that same market 10 years ago," he said.

"So the amount of opportunities that we believe we'd be able to tap into is enormous and as a result of that we also have the confidence that we'll be able to create incremental value for shareholders in due course."

Macquarie analyst Matthew Smith says the bank has its work cut out: "I think it's a stretch to expect this by 2017. This is especially tough given the utter lack of cost synergies.

"If you add in the capital-raising that they will likely have to do, then it becomes even more difficult to achieve higher profitability ratios."

Other analysts have said the price is too hefty as OCBC is not immediately benefiting from the takeover but will have to invest in Wing Hang and build up its range of products and services first.

But it should be noted that DBS paid more than three times Dao Heng's book value, while OCBC is offering 1.77 times Wing Hang's book.

UOB Kay Hian analyst Jonathan Koh also pointed out that OCBC has not had to dangle extra incentives to seal the deal, such as allowing Wing Hang shareholders to receive a special dividend before the takeover.

And to be sure, OCBC is looking to enter Hong Kong, the biggest Chinese yuan hub in the world, just as offshore trading and use of the yuan is exploding.

Of course, only time will tell whether OCBC has landed a bargain or living through its own Dao Heng nightmare.

yasminey@sph.com.sg