United Engineers

[yeokiwi]

http://infopub.sgx.com/FileOpen/Expiry_o...eID=335115

OCBC Bank and GEH wish to update their respective shareholders that the parties are not able to
reach an agreement on an appropriate transaction structure for the Possible Transaction and the
Exclusivity Agreement has lapsed

[crabcrab]

"Lapse of Exclusivity Agreement" does not tantamount to a complete stop of putting up UE for sale. In contrary, it may open up a new window of opportunity for other potential buyers for competing bids.. It is of anybody guess at this juncture.... (crabcrab vested again today)...

[CityFarmer]

I have removed a post with TA chart, and nothing else.

Please refrain from posting TA chart, and focus on FA.

Thank

Regards
Moderator

[Bigboss888]

Precedent Comparables:

Kep Corp & Kep Land: 0.92 P/BV

UOL & Pan Pacific: 1.65 P/BV

HPL: 1.13 P/BV (current price at $4.05 is higher than offer at $3.50)

UE and (Potential Bidder): Using last announced NAV at $2.89
At 0.92 P/BV: $2.65
At 1.13 P/BV: $3.26
At 1.65 P/BV: $4.76


If NAV is revised to at least $3:
At 0.92 P/BV: $2.76
At 1.13 P/BV: $3.39
At 1.65 P/BV: $4.95


While I have included the Keppel transaction, it has to be noted that there wouldn&rsquo t be a premium paid for an internal takeover in Keppel&rsquo s case while for pan pacific, it demanded a premium. As such I would use the average of both the HPL and Pan Pac offers as a guide (< 1.65+1.13> /2=1.39)
At 1.39x $2.89: $4
At 1.39x $3: 4.17
Using the comparable method, a $4 to $4.17 range would be a good offer.


Even if the Kep transaction is included, the average P/BV would be (< 0.92+1.13+1.65> /2=1.23)
At 1.23x $2.89: $3.55
At 1.23x $3: $3.69

today' s marked short sell volume of 948 lots against total transacted volume of 26,851 is approximately 3+%. This is consistent from my review of the last two times where UE dropped from 3.20+ to 2.97 where short sell volume averaged 30 over total of 8000 which is also about 3+%. This was preceeded by a sharp rebound. No one really shorts this stock. I anticipate the new bidders to announce their intention or offer very soon, possibly before the annual report is due end of FEB, as the revised NAV and profit increase by at least 30% will see the price rise significantly, thereby reducing the premium on any offer made at this point. The keppel bid was also made before Keppel Land' s annual report and dividend proposal was announced.

[Behappyalways]

Normally when there is a drastic fall in share price with volume, it will follow with margin call.

not vested

[Bigboss888]

Normally when there is a drastic fall in share price with volume, it will follow with margin call.

not vested

possibly. this would create an opportunity to pick up. my analysis is used to evaluate possible value and not so much trading opportunity. cheers

[egghead]

The Lee family's intention to sell UE is loud and clear with the disposals of many non-property business (with MFLX the last big one left). The failure to reach an agreement also signals that they are prepared to do so only at a good price. In the mean time, perhaps shareholders can hope for $0.20 dividend this year?

[crabcrab]

Usually, an M&A is confidential and by the time an announcement is made, a deal is done. However, an announcement to the public of a so called "exclusive on-going talk" is usually a smart unilaterally action by the selling party, signaling that the selling party could yet to get a good price and hence hope that through such announcement, would generate a higher valuation through market forces. This will reflect in the listed market price. In addition, the selling party could buy time in the hope that other interested parties could counter offer at a higher price, forcing a current buying party to bid at a higher price.

In contrary, the interested buying party usually wanted to keep such on-going talk as confidential as possible so as not to trigger an increased in price in the market, thereby create better premium than market valuation if such offer bid materialised

Allowing an exclusivity talk to lapse will be a smart move by the potential buying party (provided that there is no competing bid) as it will allow market force to fall back substantially to the pre-announcement price, and thereby able to collect the scrip at a much lower price, before making another attempt to negotiate again.

...that is business psychology

[greengiraffe]

http://infopub.sgx.com/FileOpen/Q4_2014_...eID=336550

I deliberately waited till UE released its final results before posting my comments. This is due mainly to the several divestments that UE has undertaken while talks were on-going with TCC and OCBC (together with related parties).

To be fair due to the negotiations and due d, UE has sold the bulk that is salable.

In total it raised book value to $2.93 which has included annual valuation of investment properties (implying little hidden values from at least the investment properties part).

In all, UE sold non core assets for around $630m and realising S$51m profits in the process. In fact, due to the flurry of sales many would have thought that UE could be flushed with cash which is not really the case.

Net debt fell from around $2bn to $1bn largely due to asset sales, completion of Ausville and the sale of SPV for Orchardgateway back to OCBC/GE post completion of the development.

I guess the asking price for UE by the sellers could be too rich for the comfort of TCC Assets and hence the termination of the deal.

Based on current businesses, the China property assets owned largely under WBL may continue to face tough outlook, Mflex's turnaround could remain uncertain and recurrent income from its investment portfolio may not be resilient enough to withstand the historical baggage under that WBL.

I m not optimistic of outperformance of UE share price at current levels. Maybe a 20 - 30% discount to reported book value is a better margin of safety for value investors in hoping for the next deal to emerge.

Odd Lots Vested
GG

[Behappyalways]

MATTERS CONCERNING IRREGULARITIES UNCOVERED IN RESPECT OF SUBSIDIARIES OF THE COMPANY
http://infopub.sgx.com/FileOpen/General%...eID=356278