Stock Name: OUE Ltd
Company Name: OVERSEAS UNION ENTERPRISE LTD
Overseas Union Enterprise (OUE SP) BUY
Price/Tgt: S$2.14/S$3.65 Mkt Cap: S$2,101m/ US$1,628m Daily Vol: US$6.5m 1-Yr Hi/Lo: S$3.65/S$1.99
Unwinding of OUE share financing transaction removes overhang
OUE's controlling shareholder, Golden Concord Asia Limited ("GCAL") announced the unwinding of the financing transaction entered in Jan this year. As a part of the unwinding, GCAL will receive approximately 13m OUE shares and relinquish the right of return of the 53.3m OUE shares.The transaction will result result in GCAL's effective interest in OUE reduce by 4.11% to 62.98%. The unwinding will not have any material impact and would not result in any actual sale of shares by GCAL in OUE. Management noted that it has entered into no other derivative transactions in relation to OUE and has no intention of entering into any further derivative transactions involving OUE. The details have been attached for your reference.
Impact.In short, the complicated financing transaction effectively simplifies to a share placement of 42.6m or 4.11% of GCAL's OUE shares by Credit Suisse at S$3.35 per share on 20 Jan this year. This will reduce GCAL's effective stake in OUE from 67.07% to 62.98%. Post the transaction, Credit Suisse will not have any outstanding OUE shares pertaining to the financing arrangement. We view the simplification of the transaction positively as it had been an overhang on OUE's share price performance. The share price has fallen 40% post the financing transaction under-performing the FSSTI by 26% to date.
Valuation. OUE is trading below its post-08 crisis levels based on its current P/B multiples. We maintain our BUY recommendation with a target price of S$3.65 pegged at 15% discount to its FY11 RNAV of S$4.30/share.
Company Name: OVERSEAS UNION ENTERPRISE LTD
| Research House: UOB KayHian | Price Call: BUY | Target Price: 2.14 |
Overseas Union Enterprise (OUE SP) BUY
Price/Tgt: S$2.14/S$3.65 Mkt Cap: S$2,101m/ US$1,628m Daily Vol: US$6.5m 1-Yr Hi/Lo: S$3.65/S$1.99
Unwinding of OUE share financing transaction removes overhang
OUE's controlling shareholder, Golden Concord Asia Limited ("GCAL") announced the unwinding of the financing transaction entered in Jan this year. As a part of the unwinding, GCAL will receive approximately 13m OUE shares and relinquish the right of return of the 53.3m OUE shares.The transaction will result result in GCAL's effective interest in OUE reduce by 4.11% to 62.98%. The unwinding will not have any material impact and would not result in any actual sale of shares by GCAL in OUE. Management noted that it has entered into no other derivative transactions in relation to OUE and has no intention of entering into any further derivative transactions involving OUE. The details have been attached for your reference.
Impact.In short, the complicated financing transaction effectively simplifies to a share placement of 42.6m or 4.11% of GCAL's OUE shares by Credit Suisse at S$3.35 per share on 20 Jan this year. This will reduce GCAL's effective stake in OUE from 67.07% to 62.98%. Post the transaction, Credit Suisse will not have any outstanding OUE shares pertaining to the financing arrangement. We view the simplification of the transaction positively as it had been an overhang on OUE's share price performance. The share price has fallen 40% post the financing transaction under-performing the FSSTI by 26% to date.
Valuation. OUE is trading below its post-08 crisis levels based on its current P/B multiples. We maintain our BUY recommendation with a target price of S$3.65 pegged at 15% discount to its FY11 RNAV of S$4.30/share.
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