Overseas Chinese Banking Corporation (OCBC Bank)

(18-08-2014, 11:29 PM)Dividend Warrior Wrote:

(18-08-2014, 11:12 PM)toiletsiao Wrote:

(18-08-2014, 11:09 PM)Dividend Warrior Wrote: I am waiting to initiate a position at $9.90 or below

u have a chance on monday.....sure go below 9.90... XR XD at the same time

That would be beautiful.

it went up instead of tanking
SGD 10.28 at the time of reporting.

Actually there is something I dun quite understand.

Given rights is 8 for 1.

Dilution will be 12.5%

Discount is however 25%

Isn't the discount a bit aggressive?

But market seems to like this discount?

(19-08-2014, 03:15 PM)Greenrookie Wrote: Actually there is something I dun quite understand.

Given rights is 8 for 1.

Dilution will be 12.5%

Discount is however 25%

Isn't the discount a bit aggressive?

But market seems to like this discount?

Mr. Market seems optimistic on the outlook post-Wing Hang deal...

(not vested)

Discount is actually based on the last traded price when they announced the right issue if i am not wrong. So usually the last traded price will be supported (aka as high as possible) by who? Your guess is good as mind. The number one thing all companies most afraid of is the market doesn't want to support the rights issue due to "mis-pricing" of the discount. Or even luke warm support, then this is an opportunity for you to pick up some nil-paid-rights trading in the market if you think you understand this company better.
To me, every rights issue is always a window of an opportunity especially you "like" the company.
(Not vested)

I think the general feel is that the amount of capital raised and dilution is smaller than what the streets have been pricing in.

According to OCBC: "After the rights issue, OCBC's Tier One capital ratio, a measure of the bank's financial strength, will stand at 13.2 per cent. Once Basel III bank capital rules are fully applied, its Tier One will be 10.2 per cent - comfortably above the 9 per cent Basel III level".

It will be be interesting to see if the rating agencies like the capital structure - so far it seems Moody's likes it.

According to TODAY:
OCBC’s Tier 1 CAR will be 13.2 per cent after the rights issue, the bank said yesterday, prompting Moody’s Investors Service to call the move “credit positive”. Moody’s Investors Service had as recently as April placed OCBC on review for downgrade, citing the financial impact of the Wing Hang acquisition.

Yesterday, Mr Eugene Tarzimanov, Moody’s senior credit officer for its Asia-Pacific financial institutions group, told TODAY: “The rights issue will stabilise OCBC’s capital profile to a level that we consider strong, and the bank has now come out of the acquisition with a capital ratio that is still in line with highly-rated peers.

“At 13.2 per cent, OCBC’s Tier 1 CAR is technically the lowest compared with DBS and UOB, but keep in mind that Singapore banks’ capital ratios are already larger than those of banks in other major Asian economies. OCBC’s ‘lowest’ will still compare favourably with some of the other large, highly-rated banks globally.”

Can any vbuddies advise when the existing shareholders can start going to ATM machine to accept the right shares?

(19-08-2014, 08:57 PM)AlphaQuant Wrote: I think the general feel is that the amount of capital raised and dilution is smaller than what the streets have been pricing in.

According to OCBC: "After the rights issue, OCBC's Tier One capital ratio, a measure of the bank's financial strength, will stand at 13.2 per cent. Once Basel III bank capital rules are fully applied, its Tier One will be 10.2 per cent - comfortably above the 9 per cent Basel III level".

It will be be interesting to see if the rating agencies like the capital structure - so far it seems Moody's likes it.

According to TODAY:
OCBC’s Tier 1 CAR will be 13.2 per cent after the rights issue, the bank said yesterday, prompting Moody’s Investors Service to call the move “credit positive”. Moody’s Investors Service had as recently as April placed OCBC on review for downgrade, citing the financial impact of the Wing Hang acquisition.

Yesterday, Mr Eugene Tarzimanov, Moody’s senior credit officer for its Asia-Pacific financial institutions group, told TODAY: “The rights issue will stabilise OCBC’s capital profile to a level that we consider strong, and the bank has now come out of the acquisition with a capital ratio that is still in line with highly-rated peers.

“At 13.2 per cent, OCBC’s Tier 1 CAR is technically the lowest compared with DBS and UOB, but keep in mind that Singapore banks’ capital ratios are already larger than those of banks in other major Asian economies. OCBC’s ‘lowest’ will still compare favourably with some of the other large, highly-rated banks globally.”

INDICATIVE TIME TABLE FOR KEY EVENTS
Shares trade ex-Rights 25 August 2014 from 9.00 a.m.
Books Closure Date 27 August 2014 at 5.00 p.m.
Despatch of the Offer Information Statement 1 September 2014
Commencement of trading of “nil-paid” Rights 1 September 2014 from 9.00 a.m.
Last date and time for trading of “nil-paid” Rights 9 September 2014 at 5.00 p.m.
Last date and time for acceptance of and payment for Rights Shares 15 September 2014 at 5.00 p.m.
Last date and time for application and payment for excess Rights Shares 15 September 2014 at 5.00 p.m.
Expected date of issuance of Rights Shares 26 September 2014
Expected date of commencement of trading of Rights Shares 29 September 2014

Thanks ngee.

Is that mean we can start to accept the right shares at ATM from 1 Sep and before 15 Sep, 5pm?

(19-08-2014, 10:56 PM)ngee Wrote: INDICATIVE TIME TABLE FOR KEY EVENTS
Shares trade ex-Rights 25 August 2014 from 9.00 a.m.
Books Closure Date 27 August 2014 at 5.00 p.m.
Despatch of the Offer Information Statement 1 September 2014
Commencement of trading of “nil-paid” Rights 1 September 2014 from 9.00 a.m.
Last date and time for trading of “nil-paid” Rights 9 September 2014 at 5.00 p.m.
Last date and time for acceptance of and payment for Rights Shares 15 September 2014 at 5.00 p.m.
Last date and time for application and payment for excess Rights Shares 15 September 2014 at 5.00 p.m.
Expected date of issuance of Rights Shares 26 September 2014
Expected date of commencement of trading of Rights Shares 29 September 2014

http://www.cnbc.com/id/101929032

OCBC can pay for WHB, but now it needs to deliver
Leslie Shaffer | Writer for CNBC.com
1 Hour AgoCNBC.com

OCBC's planned rights issue to finance its pricey acquisition of Wing Hang Bank may have reassured the market, but now the Singapore bank must overcome skepticism about the deal's merits.
"Looks good on paper, but devil is in execution," said Ng Wee Siang, an analyst at Maybank-Kim Eng, in a note Tuesday. "The market is likely to stay unconvinced until concrete results emerge," which will likely only be in the second half of next year, at the earliest, he said, adding he's "not taking a leap of faith" and keeping a "hold" call on the stock.
Read MoreWhy foreign banks pay over the odds for a China foothold
Late Monday, OCBC said it would raise around 3.3 billion Singapore dollars ($2.7 billion) via a one-for-eight rights issue of 440 million shares sold at 7.65 Singapore dollars a share, or a 25 percent discount to Friday's share price. The rights offer will top up the Singapore bank's balance sheet after its $5 billion takeover of Wing Hang. OCBC paid around 1.8 times the Hong Kong bank's price-to-book ratio, compared with most mainland Chinese banks trading at less than one times.
The Singapore bank's share price reacted positively to the news, tacking on 1.1 percent even as peers DBS and UOB fell 0.3 percent each.

Munshi Ahmed | Bloomberg | Getty Images
OCBC's management remains upbeat on the deal and the potential for synergies.
"Wing Hang provides us with quite good access particularly in the Southern part of China and particularly in the Pearl River Delta region," where OCBC only has a minimal presence, Samuel Tsien, group CEO at OCBC, told CNBC Tuesday.
Read MoreSingapore's OCBC offers to buy Wing Hang Bank for $4.95 billion
"There's a lot of interconnectivity between the Pearl River Delta region, Hong Kong and Macau," he said, noting OCBC expects to capture both onshore and offshore business from Chinese firms there.
But Maybank's Ng isn't the only skeptical analyst.
"Management still has a long way to go to prove to shareholders on the merits of this acquisition, considering the premium paid for a mid-sized retail and SME bank that is seemingly disparate from OCBC's core banking business (which is superior in returns and lower in valuations), and how much it can really aid them in tapping into the Greater China-Asean (Association of Southeast Asian Nations) trade and investment flows," Benjamin Ong, an analyst at PhillipCapital, said in a note Tuesday.
He's sticking with a "neutral" call, expecting the WHB deal will offer only limited upside in the near-to-mid-term.
Even Citigroup, which raised its target price on the stock by nearly 7 percent after the announcement of the rights issue, is also staying "neutral."
"While the onshore-offshore China strategy to deepen relationships with large corporates remains a compelling angle to the China story, we note that WHB's onshore China operation profitability has been poor," Citigroup analysts Robert Kong and Gary Lam said in a note Monday. They were concerned about how long it will take to execute on synergies as well as the upfront integration costs.
Read MoreAnalysts slash forecasts for Singapore 2014 growth
To be sure, having doubts about the deal hasn't kept some analysts from being positive on the stock.
"Fear of a rights issue had been a key drag on the share price since OCBC announced its intention to acquire WHB. However, with the quantum of dilution now clear, we see the easing of dilution fears as a catalyst for the stock," CIMB analysts Kenneth Ng and Jessalynn Chen said in a note Monday.
They're keeping an "add" call, with OCBC their top Singapore bank pick.
"The deal is no doubt bad for immediate ROEs (return on equity), and it also depresses capital ratios, but these negatives were factored into the early year underperformance," CIMB said. Earlier this year, the stock fell more than 11 percent in the weeks after word of talks with WHB emerged in early January. It's still only trading flat with its level at the start of the year.
CIMB noted that OCBC has previously executed the onshore-offshore China strategy well in Northern China and it expects the Singapore bank will likely be able to replicate it in Southern China, tapping WHB's existing network.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter@LeslieShaffer1

http://www.businesstimes.com.sg/premium/...m-20140820

PUBLISHED AUGUST 20, 2014
HOCK LOCK SIEW
Patience needed for Wing Hang to bloom
BYSIOW LI SEN
lisen@sph.com.sg @SiowLiSenBT

Mr Tsien: Took pains to point out that OCBC's China exposure is actually rather small and to not trumpet the deal as 'transform- ational'. - PHOTO: BLOOMBERG
EIGHT months on since OCBC Bank said it was in exclusive talks to buy Hong Kong's Wing Hang Bank, the process has run smoothly and Monday's rights issue announcement has capped a successful acquisition.
Even an attempt by American hedge fund Elliott Management Corp last month to try and squeeze OCBC into raising its offer price quickly flopped when the bank held firm - kudos to OCBC's management led by its unflappable chief executive, Samuel Tsien.
The bank seems to have regained its standing among investors following the steep 25 per cent discount given by the S$3.3 billion rights issue offer to raise funds to pay for Wing Hang, which will be renamed OCBC Wing Hang on Oct 1.
Yesterday, the stock rose 11 cents to S$10.31 with some analysts now calling a "buy" on the stock while others remained neutral.