Saturday February 9, 2013
Hwang-DBS becomes subject of takeover bid
By TEE LIN SAY
PETALING JAYA: Stand-alone investment bank Hwang-DBS (M) Bhd has become the subject of a takeover bid, with strong interest coming from the likes of CIMB Bank Bhd, AMMB Holdings Bhd, Affin Holdings Bhd and K&N Kenanga Holdings Bhd, sources told StarBizWeek.
Shares of Hwang-DBS have been actively traded amid this speculation, with its price running up by some 59.24% since Dec 28. Hwang passed away on Dec 16 at the age of 83.
The price tag being bandied around for a takeover is at 1.3 times price-to-book value.
At its current price of RM3.79, Hwang-DBS is trading at 1.03 times its book value of RM3.67.
A takeover price of 1.3 times book would value Hwang-DBS at RM1.22bil or RM4.80 per share.
When RHB Capital Bhd purchased OSK Investment Bank Bhd, it was at a price-to-book (P/B) value of 1.77 times or a purchase price of RM1.95bil. In the acquisition of ECM Libra Investment Bank by K&N Kenanga Holdings, it was done at 1.3 times book value, costing Kenanga RM875.1mil.
An industry player said that it would make sense for Hwang-DBS to be acquired, as its balance sheet was small and it would not be able to take on the bigger deals.
“Hwang-DBS is attractive for its retail clientele and its niche in the small and medium-sized companies. It does many of the smaller corporate exercise issues and the smaller initial public offerings. It has quite a stronghold of the smaller caps. It would be a good fit for banks which want exposure in this growing market,” said the source.
As at Oct 31, 2012, Hwang-DBS had a shareholders fund of RM936.23mil, total assets of RM4.4bil and a net asset value of RM3.67. The stock closed at RM3.79 yesterday, which would mean that it is trading at a P/B of 1.03 times. It currently has a market capitalisation of RM967.1mil based on 255.2 million outstanding shares.
At RM3.79, the stock offers a gross dividend yield of 2.6%.
As of the first quarter to Oct 31, 2012, the company's revenue increased 35.93% to RM113.41mil while net profit dropped 26.15% to RM11.48mil. For the financial year ended July 31, 2012, the company recorded a 22.73% drop in net profit to RM66.93mil while revenue dipped marginally to RM397.96mil from RM399.33mil.