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http://www.scmp.com/comment/insight-opinion/article/1493479/china-right-try-end-its-bubble-addiction
Tighter monetary conditions to prevail in china..OCBC bought in @ wrong time
When ocbc reach 9.8, uob reach 23. For every 1% ocbc rise, uob rise 10% or 10 times more. Ocbc still a mkt loser in my view.
towards 9.80 soon
Fitch Ratings has assigned Oversea-Chinese Banking Corp' s (OCBC) US$1b 4 per cent Basel III-compliant Tier 2 capital securities due 2024 a final rating of ' A+' , on Rating Watch Negative (RWN).
This follows the completion of the securities issue and receipt of final documentation conforming to information already received. The final rating is the same as the expected rating assigned on April 9, 2014.
KEY RATING DRIVERS
The Basel III-compliant Tier 2 securities are rated one notch below OCBC' s Viability Rating (VR) of ' aa-' /RWN to reflect their below-average loss-severity risk due to their partial rather than mandatory full write-off feature.
DBS is no longer a very agressive bank. The current CEO is focused on increasing profit and shareholder value.
UOB has always have a track record of shareholder returns.
OCBC has replaced DBS as the agressor in M& A. OCBC just bought ING private bank for $1 billion not long ago (if I remember correctly), bought bank of Ningbo and Wing Hang bank.
OCBC sold the cash cows F& N and APB, did not return any surplus cash to shareholders but made so many acquisitions that will result in alot of goodwill (paying above book value). Instead of providing cashflow to shareholders by dividend, OCBC may have to ask shareholders for $$ to boost its capital for all the acquisitions.
In the current STI mini-bull run, all the STI stocks are running high including DBS and UOB. OCBC is dropping almost everyday. In terms of capital gain from stock appreciation, OCBC shareholders get nothing. In terms of cashflow from dividends, the potential rights issue probably drain OCBC shareholders of more cashflow than what they have earned from dividends for the past few years.
People buy stock for capital appreciation or postive cash flow from dividend. OCBC gives neither.
OCBC will not crash out. But come 2017, when Singapore economy is way stronger and the STI reach 4000, UOB may hit $28 or even $30. DBS may hit $22 or even $24. OCBC will most like stay at $9.
Take note that DBS is too aggressive (1997 financial crisis is a lesson for DBS).
UOB is too conservative as it is too family-run-controlled.
OCBC is in between.
goondoo ( Date: 14-Apr-2014 16:42) Posted:
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it may test $9.70
spore1 ( Date: 23-Mar-2014 12:06) Posted:
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Right now, OCBC is the worst performing STI index stock and likely to stay as worst performing for the rest of the year. As OCBC management say earnings from Wing Hang acquisition will only be earnings acretive in 2017, OCBC shares will only perform after 2017, which is 3 years away. Probably will stay worst performing STI stock for next 3 years. Best to avoid OCBC at all costs. UOB is a better bet as it is going above its 52 weeks high on record earning. The only consolation is that as UOB share price rise and OCBC shrink, OCBC may become small enough target for UOB to acquire in 3 years time.
Yes, OCBC likely to trend higher. With Wing Hang Bank, it will be a much bigger bank with a lot more Chinese & HK customers.
it may cont to head higher
spore1 ( Date: 23-Mar-2014 12:06) Posted:
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BRIEF-OCBC announces pricing of $1 bln fixed rate subordinated notes
09 Apr 2014 - 00:28
April 9 (Reuters) &ndash Oversea-Chinese Banking Corporation Ltd < OCBC.SI> :
Priced $1 billion of fixed rate subordinated notes under its $10 billion global medium term note program
Notes are priced at 99.40 percent, and will bear a coupon of 4 percent per annum
Says notes represent OCBC Bank' s first Basel III capital instrument
Notes are expected to qualify as tier 2 capital of the bank under the Monetary Authority of Singapore Basel III framework
Application will be made for listing of the notes on Singapore Exchange Securities Trading Ltd
Source text for Eikon [ID:nSNZbygJMN]
(For more news, please click here [OCBC.SI])) ((Bangalore Newsroom +91 80 6749 1130 begin_of_the_skype_highlighting
+91 80 6749 1130 FREE end_of_the_skype_highlighting)
09 Apr 2014 - 00:28
April 9 (Reuters) &ndash Oversea-Chinese Banking Corporation Ltd < OCBC.SI> :
Priced $1 billion of fixed rate subordinated notes under its $10 billion global medium term note program
Notes are priced at 99.40 percent, and will bear a coupon of 4 percent per annum
Says notes represent OCBC Bank' s first Basel III capital instrument
Notes are expected to qualify as tier 2 capital of the bank under the Monetary Authority of Singapore Basel III framework
Application will be made for listing of the notes on Singapore Exchange Securities Trading Ltd
Source text for Eikon [ID:nSNZbygJMN]
(For more news, please click here [OCBC.SI])) ((Bangalore Newsroom +91 80 6749 1130 begin_of_the_skype_highlighting
+91 80 6749 1130 FREE end_of_the_skype_highlighting)Given the better terms of the takeover and 3 LARGE foreign banks backing the loan for this takeover.....it is hard for price to move down as " trading centre"
wish.....Further a 17 cents dividend is given XD 28th APril......haha maybe someone wish to buy into this counter.
Certainly with the enlarge pool of WingHang bank customer.....OCBC and more so Bank of Singapore is going to benefit from these investor and commercial banking sector...which is one of the largest growing sector for both OCBC and DBS ....hehe
Octavia ( Date: 08-Apr-2014 12:03) Posted:
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OCBC ST: key resistance at 9.8.
Trading Central | 2014-04-08 02:36:00
Short positions below 9.8 with targets @ 9.05 & 8.85 in extension.
Pivot: 9.8
Our preference: Short positions below 9.8 with targets @ 9.05 & 8.85 in extension.
Alternative scenario: Above 9.8 look for further upside with 10.25 & 10.55 as targets.
Comment: The upward potential is likely to be limited by the resistance at 9.8.
Supports and resistances:
10.55
10.25
9.8
9.63 Last
9.05
8.85
8.55
Copyright 1999 - 2014 TRADING CENTRAL
In a key feature by The Edge magazine, OCBC&rsquo s CEO Samuel Tsien was quoted as calling the Wing Hang acquisition &lsquo &rsquo transformational&rsquo &rsquo , with the magazine highlighting that OCBC could even reclaim its position as Asean&rsquo s largest bank, a position it once held until 1996. As a guide, the acquisition of Wing hang would see OCBC grow its asset size by another 9% to a pro forma of $373.3b, just 7% short of DBS, and overseas earnings contribution on a pre-tax profit basis would jump to 47% versus UOB&rsquo s 41% and DBS&rsquo s 35%. An appreciation of the new combined entity by investors could result in a premium market rerating, while the group&rsquo s market value would also likely be boosted by the raising of additional equity capital to finance the acquisition. In regards to the group&rsquo s strategy, OCBC does not aim to compete head on with the Chinese domestic banks, while instead the bank aims to focus on trade and investment flows between China, Asean and the Asian region, where foreign banks generally have a competitive advantage due to its regional presence. OCBC does not aim to compete with the Chinese domestic banks, but instead they aim to capture the fund flows of trade and investment between greater China and Asean, where foreign banks are generally better in this area due to its regional presence. Will also grant it access to additional currency despoits like RMB, HKD and USD deposits which could be used to fund an expansion in assets and expand its suite if activities. The grp also intend to cross sell more of its products and services, and its subsidiary great eastern will also be able to penetrate the insurance market. As a comfort, OCBC has had a good track record in M& A' s, as evident in their acquisitions in Great Easetern, its acqusition of Bank NISP in Indonesia and its acquisition of ING private bank, all of which has yield pretty positive results. Using a 10 yr period, OCBC shares has O/p its peers, yielding a 90% return vs UOB' s 625 and DBS 25%.
Given the positive news on the takeover terms,this is really daylight dreaming to expect prices to go at these levels again unless there is a global market crash or major downturn in Asian equities.
john_ric ( Date: 02-Apr-2014 15:04) Posted:
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still dreaming.................
Octavia ( Date: 01-Apr-2014 12:40) Posted:
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Standard & Poor' s Ratings Services affirmed its ' AA-' long-term and ' A-1+' short-term issuer credit ratings on Singapore-basedOversea-Chinese Banking Corp Ltd. (OCBC). The outlook on the long-term rating is stable. S& P also affirmed our ' axAAA/axA-1+' ASEAN regional scale rating on OCBC. In addition, we affirmed all the issue ratings on the bank' s debt.
S& P affirmed the rating because they believe OCBC' s financial profile will remain unaffected despite the bank' s proposed acquisition of Hong Kong-based Wing Hang Bank Ltd. S& P believes OCBC will continue to benefit from its strong marketposition and solid funding profile.
OCBC' s risk-adjusted capitalisation could become strained because of the significant amount of goodwill from the acquisition and, to a lesser extent, the higher economic risk associated with Wing Hang' s China operations. S& P believes OCBC will raise capital to maintain capital ratios appropriate for the " adequate" category.
OCBC has made an offer through its wholly-owned subsidiary OCBC Pearl Ltd. to acquire the entire issued share capital of Wing Hang. The offer is conditional upon OCBC Pearl acquiring more than 50 per cent of Wing Hang shares. The proposed acquisition, which is subject to regulators' approvals, is likely to be completed in the second half of 2014.
OCBC makes HK$38.4b offer for Wing Hang Bank
Some analysts say the deal' s price and capital structure are in line with expectations
The market perked up slightly on OCBC Bank' s lower-than-expected conditional offer for Hong Kong' s Wing Hang Bank yesterday, with the Singapore lender' s shares closing five cents or 0.53 per cent higher at $9.56. OCBC is offering HK$125 in cash for each Wing Hang share, which comes up to HK$38.43 billion (S$6.23 billion) in total - lower than the S$6.7 billion estimated by the Street.
Even so, this deal is the largest by a local bank since DBS' s US$5.8 billion purchase of Hong Kong' s Dao Heng Bank in 2001. The addition of Wing Hang to its pockets will be accretive to OCBC' s earnings per share and return on equity by 2017, the bank said. On a pro-forma basis, Wing Hang would have increased the full-year pre-tax contribution from Greater China to OCBC from 6 per cent to 16 per cent in 2013, post-acquisition.
Wing Hang' s founding Fung family, their affiliates, related family trusts and BNY International Financing Corporation have agreed to sell a total of 44.79 per cent of Wing Hang shares to OCBC. Commitments from other Wing Hang shareholders will bring OCBC' s share of the bank to 50.66 per cent.
If OCBC is able to acquire 100 per cent of Wing Hang, the former intends to delist it from the Hong Kong Stock Exchange, Group CEO Samuel Tsien said at a media briefing yesterday. Standard & Poor' s said yesterday that it had affirmed its AA- long-term and A-1+ short-term issuer credit ratings on OCBC.
" We affirmed the rating because we believe OCBC' s financial profile will remain unaffected despite the bank' s proposed acquisition of Hong Kong-based Wing Hang Bank Ltd," said Standard & Poor' s credit analyst Chris Lee.
OCBC' s counter took a beating earlier this year when the market expected a pricier deal. From $10.18 at the start of 2014, it had shed almost 11 per cent to $9.09 by February.
Asked about OCBC' s offer being lower than expected, Mr Tsien said that he believes that the offer price is " fair and equitable" .
" It recognises the value that Wing Hang has in this franchise and . . . we think it' s a fair deal for the selling shareholders as well as the acquiring entity," he said.
Wing Hang' s counter closed 20 cents or 0.16 per cent higher at HK$123.20 yesterday.
The deal will be funded through a mix of internal resources, new debt and equity capital. It will also be OCBC' s first purchase which involves funding through equity, in a departure from its previous acquisitions or investments.
" We have the opportunity to acquire the entire issued share capital of Wing Hang, so as a result of that, from a prudent capital management perspective, it is right for us to look at a funding plan that involves both debt and equity," Mr Tsien said. How much OCBC will raise depends on the outcome of its general offer for Wing Hang. " It is our intention to make sure that our capital adequacy will always be at a prudent level with a sufficient cushion above the regulatory minimum," Mr Tsien added.
He also said that OCBC does not envisage selling its stake in Great Eastern Holdings to raise funds for this purchase. The acquisition is expected to lower OCBC' s total capital adequacy ratio from 16.3 per cent to 12.5 per cent, before any capital raising.
For some analysts, the deal' s price and capital structure were in line with expectations, with the offer translating to a price-to-book ratio of 1.77.
" Investors may be relieved that pricing is reasonable . . . and did not resort to financing engineering (such as allowing Wing Hang shareholders to receive special dividend prior to acquisition) to seal the deal," said UOB Kay Hian analyst Jonathan Koh in a note yesterday.
Even so, Phillip Securities Research' s Benjamin Ong noted: " At a price-to-book ratio of 1.77, there' s still a premium attached for strategic control of a mid-sized bank, especially if we strip out Wing Hang' s final dividend from the book value, as well as the property revaluation reserve. So, in fact, the offer value is about 2.02 times, price-to-book."
This deal will be more than just a way for OCBC to gain better access to mainland China - it will be a way for OCBC to capitalise on the money moving between North Asia and South-east Asia, said Mr Tsien.
" The flows that we are seeing (between the two regions) - the US$600 billion trade flow, the US$11 billion investment flow in 2013 alone - it' s a big market that only regional banks will be able to tap into," he said. At the same time, Wing Hang' s presence in Hong Kong and Macau will give OCBC a shot at the offshore renminbi (RMB) market. " It is the market that we have to access. I need that base in order to build further into offshore RMB products," Mr Tsien said.
On top of that, OCBC will have access to a wider pool of affluent retail customers to whom it can cross-sell wealth management products, he added. Even so, other facets of Wing Hang' s exposure have given some market-watchers pause.
" Hong Kong residential mortgage and China loans together accounted for 38 per cent of Wing Hang Bank' s loan book. We are concerned about this exposure as Hong Kong property prices are declining and cases of mainland bond defaults are increasing," said Krishna Guha, an equity analyst with Jefferies Singapore. " While Wing Hang' s (loan-to-deposit ratio) may be raised from the current 76 per cent, we think the current credit cycle warrants some caution. Also, given potential interest rate liberalisation, we doubt if the combined entity would have any funding advantage."
This offer is conditional on regulatory approval and on OCBC getting acceptances that amount to more than 50 per cent of Wing Hang shares, among other things. Preliminarily, regulatory approvals for the deal and the dispatch of the offer document are likely to take place by June, with the offer closing by August.
If the deal goes through, OCBC will keep the employees of Wing Hang and its subsidiaries on for at least the following 18 months.
Where integration of operations between the two entities was concerned, Mr Tsien was optimistic. " There is definitely cultural fit between the two organisations of OCBC and Wing Hang," he said.
Even so, this deal is the largest by a local bank since DBS' s US$5.8 billion purchase of Hong Kong' s Dao Heng Bank in 2001. The addition of Wing Hang to its pockets will be accretive to OCBC' s earnings per share and return on equity by 2017, the bank said. On a pro-forma basis, Wing Hang would have increased the full-year pre-tax contribution from Greater China to OCBC from 6 per cent to 16 per cent in 2013, post-acquisition.
Wing Hang' s founding Fung family, their affiliates, related family trusts and BNY International Financing Corporation have agreed to sell a total of 44.79 per cent of Wing Hang shares to OCBC. Commitments from other Wing Hang shareholders will bring OCBC' s share of the bank to 50.66 per cent.
If OCBC is able to acquire 100 per cent of Wing Hang, the former intends to delist it from the Hong Kong Stock Exchange, Group CEO Samuel Tsien said at a media briefing yesterday. Standard & Poor' s said yesterday that it had affirmed its AA- long-term and A-1+ short-term issuer credit ratings on OCBC.
" We affirmed the rating because we believe OCBC' s financial profile will remain unaffected despite the bank' s proposed acquisition of Hong Kong-based Wing Hang Bank Ltd," said Standard & Poor' s credit analyst Chris Lee.
OCBC' s counter took a beating earlier this year when the market expected a pricier deal. From $10.18 at the start of 2014, it had shed almost 11 per cent to $9.09 by February.
Asked about OCBC' s offer being lower than expected, Mr Tsien said that he believes that the offer price is " fair and equitable" .
" It recognises the value that Wing Hang has in this franchise and . . . we think it' s a fair deal for the selling shareholders as well as the acquiring entity," he said.
Wing Hang' s counter closed 20 cents or 0.16 per cent higher at HK$123.20 yesterday.
The deal will be funded through a mix of internal resources, new debt and equity capital. It will also be OCBC' s first purchase which involves funding through equity, in a departure from its previous acquisitions or investments.
" We have the opportunity to acquire the entire issued share capital of Wing Hang, so as a result of that, from a prudent capital management perspective, it is right for us to look at a funding plan that involves both debt and equity," Mr Tsien said. How much OCBC will raise depends on the outcome of its general offer for Wing Hang. " It is our intention to make sure that our capital adequacy will always be at a prudent level with a sufficient cushion above the regulatory minimum," Mr Tsien added.
He also said that OCBC does not envisage selling its stake in Great Eastern Holdings to raise funds for this purchase. The acquisition is expected to lower OCBC' s total capital adequacy ratio from 16.3 per cent to 12.5 per cent, before any capital raising.
For some analysts, the deal' s price and capital structure were in line with expectations, with the offer translating to a price-to-book ratio of 1.77.
" Investors may be relieved that pricing is reasonable . . . and did not resort to financing engineering (such as allowing Wing Hang shareholders to receive special dividend prior to acquisition) to seal the deal," said UOB Kay Hian analyst Jonathan Koh in a note yesterday.
Even so, Phillip Securities Research' s Benjamin Ong noted: " At a price-to-book ratio of 1.77, there' s still a premium attached for strategic control of a mid-sized bank, especially if we strip out Wing Hang' s final dividend from the book value, as well as the property revaluation reserve. So, in fact, the offer value is about 2.02 times, price-to-book."
This deal will be more than just a way for OCBC to gain better access to mainland China - it will be a way for OCBC to capitalise on the money moving between North Asia and South-east Asia, said Mr Tsien.
" The flows that we are seeing (between the two regions) - the US$600 billion trade flow, the US$11 billion investment flow in 2013 alone - it' s a big market that only regional banks will be able to tap into," he said. At the same time, Wing Hang' s presence in Hong Kong and Macau will give OCBC a shot at the offshore renminbi (RMB) market. " It is the market that we have to access. I need that base in order to build further into offshore RMB products," Mr Tsien said.
On top of that, OCBC will have access to a wider pool of affluent retail customers to whom it can cross-sell wealth management products, he added. Even so, other facets of Wing Hang' s exposure have given some market-watchers pause.
" Hong Kong residential mortgage and China loans together accounted for 38 per cent of Wing Hang Bank' s loan book. We are concerned about this exposure as Hong Kong property prices are declining and cases of mainland bond defaults are increasing," said Krishna Guha, an equity analyst with Jefferies Singapore. " While Wing Hang' s (loan-to-deposit ratio) may be raised from the current 76 per cent, we think the current credit cycle warrants some caution. Also, given potential interest rate liberalisation, we doubt if the combined entity would have any funding advantage."
This offer is conditional on regulatory approval and on OCBC getting acceptances that amount to more than 50 per cent of Wing Hang shares, among other things. Preliminarily, regulatory approvals for the deal and the dispatch of the offer document are likely to take place by June, with the offer closing by August.
If the deal goes through, OCBC will keep the employees of Wing Hang and its subsidiaries on for at least the following 18 months.
Where integration of operations between the two entities was concerned, Mr Tsien was optimistic. " There is definitely cultural fit between the two organisations of OCBC and Wing Hang," he said.
Still very young, still can penetrate china banking market.
kirana ( Date: 31-Mar-2014 18:44) Posted:
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