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DBS (Development Bank of Singapore)
05-04-2012, 01:08 AM.
Post: #21
RE: DBS (Development Bank of Singapore)
(04-04-2012, 05:56 PM)bran Wrote: to coattails, thanks for the analysis and the details. I'm not disputing the rationale as they have to eventually play catch up to OCBC and UOB in terms of geographical exposure to the higher growth SEA region. But i think that this benefits temasek more than the minorities....(pls correct my numbers if there are any errors)
A: Net profit (pre purchase): 3035mn
B: No. of shares (pre purchase, fully diluted): 2429mn (from annual report)
EPS (pre-purchase)= A/B = $1.25

C: Combined proforma net profit (according to DBS's presentation): 3360mn
No. of shares issued to temasek/fullerton/whatever: 439mn
D: Total new no. of shares = 2868mn
E: EPS (post-purchase) = C/D = $1.17

EPS went down post-purchase

Another way to consider.
F: Temasek's share of DBS pre-purchase = 29% (approximately)
G: Temasek's share of DBS post-purchase = 40.4% (Straits times reported)
H: Temasek's share of profits pre-purchase= F * A = $880.15mn
minorities share of profits pre-purchase= A -H = 2154mn

I: Temasek's share of profits post-purchase= G * C = $1357.44
minorities share of profits post-purchase= C - I = 2002mn

Our share of profits just went down post purchase. Any benefits will have to come from the "Synergies" of the purchase which DBS has guided that it will only come post 2015

But in any case, temasek benefits proportionately more. Couldn't DBS have made a cash consideration and issued rights, giving us all the opportunity to share in proportionately in the new enlarged entity?

Hi bran, you are absolutely right that:

A) Temasek benefit more than us little minority shareholders.
B) Cash deal would have probably been a better option for acquirer shareholder in this instance.
C) If DBS had issued rights to ALL shareholders, we would not have been diluted as we can maintain proportionate ownership.

I guess the issue is that this large stake belongs to Temasek (remember 67%), and it is also pre-approved for foreign ownership by Indonesian regulators (since Temasek is Singapore, right?). If DBS goes looking to buy a another Indon bank on its own, it will face even more regulatory uncertainty and opposition than it is experiencing now. So Temasek has a lot of bargaining power here, and they want to have their cake and eat it as well.

I have my doubts too. But ultimately, I feel that the deal will allow the consolidated DBS to grow its EPS at a fast rate going forward from more geographically diversified sources, thus justifying the deal. I remember reading that DBS is focusing a lot on the Global Transaction Services aka GTS (cash management and trade finance) recently and grew revenue in this area by a lot in 2011. Indonesian companies export a lot of commodities (like coal) to China, so perhaps there are opportunities for DBS there, among others.

DBS management indicated that the revised EPS after the dilution would fall to about $1.20 down from $1.30 (got this from a news article), so that's 8% dilution? Does not look insurmountable to me in the longer term.


(04-04-2012, 07:43 PM)shanrui_91 Wrote: Damanon while being the 6th biggest bank in Indonesia only holds a market share of 4%. This is not surprising given that Mandiri, the largest, has a market share of 13.8%. Will it be able to be in the top 4? Well, only if it can be bigger than the 4 state-owned bank. The current 5th place is CIMB Niaga, another giant to fight with.

banking in indonesia is very fragmented as the entry requirement is very low. and here's a piece of news to ponder about
http://in.reuters.com/article/2012/04/03...7K20120403

Hi shanrui_91, all our neighbours hate us, don't they? Small wonder why Singapore imports so much weapons...

According to an news article I read, the consolidated bank (DBS already has some operations in Indonesia) will become the fifth largest bank. Maybe they will push CIMB Niaga down to 6th? A good old battle between Singapore and Malaysia, much like how our football team is back in the Malaysia Cup! Big Grin

The entry requirement to banking may be low, but reputation and familiarity plays a part in getting depositors, corporates and counterparties to do business with you. This is especially so when we are talking about an emerging country. DBS actually helps to improve Danamon in this aspect, while capitalizing on existing branches and customers. I do not think it is that easy for any small Indonesian bank to grow to the same scale (albeit only 4% market share) as Danamon, and even if foreign banks come knocking, they would probably do what DBS and CIMB did and look to buy the bigger banks. All the more reason to do so before the Citis, HSBCs, Stand Charts, etc.

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06-04-2012, 10:35 AM.
Post: #22
RE: DBS (Development Bank of Singapore)
Dhanamon is a decent bank, strong in micro financing. They have a good niche.

But the price is not cheap,, because temasek wants to cash out.

Maybe can buy at $12... only if no choice...

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09-04-2012, 08:24 PM.
Post: #23
RE: DBS (Development Bank of Singapore)
Quoted from TheEdge

shares in DBS clearly underperformed, returning just over 10% the past 10 years (excluding dividends). On the same basis, shares in OCBC returned 77%, and UOB returned 32%

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10-04-2012, 06:20 PM.
Post: #24
RE: DBS (Development Bank of Singapore)
Business Times - 10 Apr 2012

DBS must sell Danamon shares if stake exceeds 80%: Indonesian bourse


(JAKARTA) DBS Group Holdings Ltd, South-east Asia's largest bank, must sell shares of PT Bank Danamon Indonesia back to the public if it owns more than 80 per cent of the lender after a takeover, according to the Indonesian bourse.

DBS offered to buy Jakarta-based Danamon for about US$7.2 billion on April 2 in the biggest takeover by a South-east Asian lender. The bank will pay Singapore investment company Temasek Holdings Pte 45.2 trillion rupiah (S$6.3 billion) in new shares for its 67 per cent stake and buy the remaining stock from other shareholders for 21.2 trillion rupiah in cash.

The share sale is part of Indonesia's exchange rules requiring investors who buy more than 80 per cent of a listed company through a tender offer to sell at least 20 per cent of the stock back to the public within two years, according to the Indonesian capital market supervisory agency.

DBS should comply with that rule, Eddy Sugito, listing director at the Indonesia Stock Exchange, said in a mobile-phone text message yesterday.

'We intend to keep the listing,' said Edna Koh, a Singapore-based spokeswoman at DBS. She also referred to a DBS filing with the Singapore stock exchange last week, which said the lender will have to ensure it holds no more than 80 per cent of Danamon shares within two years of the acquisition, unless it gets a waiver or extension from Indonesian authorities.

Acquiring Indonesia's sixth-largest bank by assets will help DBS branch out from Singapore and Hong Kong to tap an economy that grew last year at the fastest pace since before the Asian financial crisis.

Trade and infrastructure finance as well as corporate and retail banking are among the promising areas in Indonesia, South-east Asia's biggest economy, Piyush Gupta, chief executive officer of the Singapore-based bank, said last week. Danamon's 3,000-branch network serves six million customers.

The Indonesian economy grew 6.46 per cent last year and is forecast to grow 6.5 per cent this year. -- Bloomberg
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10-12-2012, 07:55 PM.
Post: #25
RE: DBS (Development Bank of Singapore)
DBS Group has been well known to pay premium pricing for assets. They have proven their record yet again. While there is no doubt that MBFC is the new financial address for major financial institutions, there has also been previous doubts that the capital values are sustainable without the rental support that was being extended by their joint owners when assets were injected into K-Reit and Suntec Reit.

They paid S$2555.55psf for an eventual 1/3 share of MBFC from Cheung Kong and Hutch. So after going asset light for 7 years, DBS cannot resist the 7 year itch and now is back buying assets for 3 times that they have sold in 2005. There is no doubt that the address is different but the strategy is certainly debatable. Has OCBC or UOB executed asset light strategies on their flagship buildings?

Looking back in history, DBS sold their flagship towers in 2005 for S$789psf to GS:

http://www.asiaone.com/Business/My%2BMon...42700.html

Both the towers were subsequently acquired by OUE in 2010 for S$970psf:

http://www.asiaone.com/Business/News/Sto...31765.html

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10-12-2012, 11:08 PM.
Post: #26
RE: DBS (Development Bank of Singapore)
(10-12-2012, 07:55 PM)greengiraffe Wrote: DBS Group has been well known to pay premium pricing for assets. They have proven their record yet again. While there is no doubt that MBFC is the new financial address for major financial institutions, there has also been previous doubts that the capital values are sustainable without the rental support that was being extended by their joint owners when assets were injected into K-Reit and Suntec Reit.

They paid S$2555.55psf for an eventual 1/3 share of MBFC from Cheung Kong and Hutch. So after going asset light for 7 years, DBS cannot resist the 7 year itch and now is back buying assets for 3 times that they have sold in 2005. There is no doubt that the address is different but the strategy is certainly debatable. Has OCBC or UOB executed asset light strategies on their flagship buildings?

Looking back in history, DBS sold their flagship towers in 2005 for S$789psf to GS:

http://www.asiaone.com/Business/My%2BMon...42700.html

Both the towers were subsequently acquired by OUE in 2010 for S$970psf:

http://www.asiaone.com/Business/News/Sto...31765.html

haha i notice the companies that are linked to temasek always do interesting things.

captialand sets a record high of 1700psf for the condo at bishan

Nol sold its headquarters, reason given was sales proceeds to be used for strategic investment purposes (try telling yr parents you want to sell your only home now for investment and see what they say)

Someone provided 1.1billion for the transport company to buy more buses, upgrade infrastructure..hmmm, then why privatise those companies?

And finally dbs thinks S$2555.55psf is value for money. I am quite certain you can get a FREEHOLD grade A office space at raffles place/city hall for less than 2555.55psf

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10-12-2012, 11:20 PM.
Post: #27
RE: DBS (Development Bank of Singapore)
I am surprised Suntec REIT didn't purchase it from the Cheung Kong JV.
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11-12-2012, 12:31 AM.
Post: #28
RE: DBS (Development Bank of Singapore)
(10-12-2012, 11:20 PM)Nick Wrote: I am surprised Suntec REIT didn't purchase it from the Cheung Kong JV.

DBS is paying $1B for it. Suntec's debt is around $2.5B, hard to take on more debt.

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12-12-2012, 04:16 PM.
Post: #29
DBS (Development Bank of Singapore)
In this case i prefer to back 1:hk as lks has a much longer record of calling property well.

Vested in Cheung Kong holdings.

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12-12-2012, 10:20 PM.
Post: #30
RE: DBS (Development Bank of Singapore)
(12-12-2012, 04:16 PM)godjira1 Wrote: In this case i prefer to back 1:hk as lks has a much longer record of calling property well.

Vested in Cheung Kong holdings.
why do uwanna vest in ckh?

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