Overseas Union Enterprise

[winston]

Vested. With so many "experts" asking you to buy, the share price is still going nowhere. What happens when one of these "experts" ask you to sell ?

Overseas Union Enterprise [ PDF]
More to come - by Donald Chua
(OUE SP / OVES.SI, OUTPERFORM - Maintained, S$2.87 - Tgt. S$3.93, Property Devt & Invt)

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2Q11 core net profit of S$20m forms 15% of our FY11 forecast and 11% of consensus, with 1H11 earnings at 31% of our forecast. The miss was due to lower income from OUEB and delays in the sale completion of Crowne Plaza (CP) a timing issue.

OUEB is now 77% leased while the sale of CP was only recently completed. We expect much stronger numbers in 4Q11-1Q12. We adjust our core EPS estimates by -9%/+4% to reflect this.

Elsewhere, strong hotel revenue mirrored industry trends. We reiterate our expectation of a 28-30% yoy income surge in 2012-14 as its acquisitions start to deliver.

Maintain target price of S$3.93 (15% discount to RNAV). Higher RevPar, additional office pre-commitments and more accretive acquisitions (debt headroom of S$1bn-1.5bn on 45-50% adjusted net gearing) could provide stock catalysts, in our view.


Source: CIMB

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Vested

Maintain Buy with fair value unchanged at S$4.13

We retain our RNAV estimates and fair value is thus unchanged at $4.13.

The recent retreat in share price due to concern over global economic outlook provides even more compelling valuations of 0.9x P/B and 7.8x forward P/E.

Downside risks include lower than expected
1) occupancy rate in office and retail portfolios and
2) sales progress in residential project

Source: Phillips

[winston]

Vested

We believe concerns regarding its majority shareholder Lippo Group facing margin calls are unfounded.

We understand the derivative structure it entered with Credit Suisse on 18 Jan will not have any margin call as the underlying shares will have been placed out by then.

We believe stock price has over-reacted and presents a buying opportunity for the quality prime landlord.

OUE stock price has underperformed even its office peers, as it fell 14% since 5 August, compared to -8% for prime office developer Keppel Land and -4 to -5% for prime office REITs CCT and KREIT.

It is now back to March 2010 levels when prime Grade A office rents bottomed and from which they have recovered 31% since. It is close to the S$2.20/sh price that Lippo paid for 44% stake from Ananda Krishnan in March 2010.

Source: CS

[winston]

vested

Every "expert" analyst has a Buy Call on this counter yet it tanked.

Halted now pending release of announcement by Golden Concord Asia Limited.

[winston]

Vested. Do you think they know what they were doing in the first place ?

Lippo unwinds financing deal, OUE stake falls 4% to 63% By JAMIE LEE

Lippo Group - the controlling shareholder of Overseas Union Enterprise (OUE) - has unwound a financial transaction that may have created an overhang in OUE shares in recent weeks, OUE said on Tuesday.

OUE also said that Lippo has no other derivative transactions in relation to OUE shares, and that it does not intend to enter into further transactions involving OUE shares.

Lippo, which holds shares of OUE through Golden Concord Asia Limited (GCAL), entered into a transaction at the start of this year that had GCAL delivering 53.3 million OUE shares to an unidentified counterparty.

The transaction came with a right of return to GCAL, with the shares representing 5.43 per cent of OUE's share capital.

The counterparty then sold 42.6 million shares in January, and kept the rest for hedging purposes.

'GCAL has become aware through discussions with various institutions and investors that such financing transaction may have caused confusion in the market,' OUE said.

'It has been suggested that with the backdrop of general market weakness, this confusion may have created a further overhang on the share price of OUE in recent weeks.'

Lippo has unwound the transaction with immediate effect. This means that GCAL will receive about 13 million shares - or the remaining shares held by the counterparty that represent 1.32 per cent of OUE's share capital. It will also lose its right of return of the 53.3 million OUE shares.

As a result, GCAL's total interest in OUE has fallen by 4.1 per cent to 63 per cent.

http://www.businesstimes.com.sg/sub/lat ... 06,00.html?

[winston]

Vested

OUE announced the unwinding of the previous share swap (53.3m shares pledged, 5.43% stake) by controlling shareholder Lippo with counter party Credit Suisse.

With the unwinding of the share swap, the effective stake of Lippo is reduced by 4.11% (1.32% stake retained after relinquishing right of return of 53.3m OUE shares) to 63%.

We think the above unwinding is likely to provide relief regarding possible overhang from confusion caused by this opaque transaction , whether the shareholders were facing margin calls.

The negative impact on share price was acknowledged by the company and similar transactions are unlikely to be repeated again. We have been reiterating previous concerns were overdone.

We continue to like OUE for its quality Singapore-centric asset portfolio, and moving forward potential wild card from REIT listing may also galvanize share price by realizing embedded value of hotel portfolio.

Reiterate BUY and target price of S$4.03 based on 20% discount to RNAV.

Source: DMG

[winston]

Vested. Suddenly, all the "expert" analysts are commenting on the deal but only after it has been unwound.


Share-financing overhang over - by Donald Chua
(OUE SP / OVES.SI, OUTPERFORM - Maintained, S$2.14 - Tgt. S$3.01, Property Devt & Invt)

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Golden Concord Asia, the controlling shareholder of OUE, will be closing its share-financing transaction with Credit Suisse, started in Jan 11.

With the immediate unwinding of the position, GCAL shall now acquire the remaining 13m OUE shares (1.32% of OUE's issued capital) from Credit Suisse and relinquish the right of return of the whole lot of 53.3m OUE shares initially delivered to the latter.

This deal had caused much confusion in the market and we believe the overhang on OUE's stock would be lifted.

OUE shares are now on trading halt, but we expect its share price to react positively once the halt is lifted.

Maintain earnings forecasts, Outperform rating and target price of S$3.01, still based on a 25% discount to RNAV (S$4.01). We continue to expect catalysts from higher achieved rents and RevPAR, and more acquisitions.

Source: CIMB

[winston]

Vested

Singapore Hot Stocks-OUE jumps after shareholder unwinds deal

SINGAPORE, Aug 24 (Reuters) - Shares of Singapore property firm Overseas Union Enterprise jumped as much as 9.3 percent on Wednesday, after it said controlling shareholder Lippo Group had unwound a financing transaction. The deal may have caused confusion among investors.

At 0137 GMT, OUE shares were up 8.4 percent at S$2.32 with about 2.5 million shares traded. In the first half hour of trading or so, the shares that changed hands exceeded the daily average volume in the past 30 days.

Earlier this year, Lippo unit Golden Concord Asia had pledged 53.3 million OUE shares, equivalent to 5.43 percent of OUE's issued share capital, to a third party as part of a financing agreement.

The counterparty then sold 42.6 million of these shares in a block trade in January, with the balance of the OUE shares being retained for hedging purposes, OUE said in a statement.

The company said that the transaction may have caused confusion in the market and created a further overhang on OUE's share price in recent weeks amid the general market weakness.

Golden Concord decided to unwind the transaction, which resulted in the lowering of its total interest in OUE to 63 percent from 67.1 percent.

OUE said Golden Concord did not need any alternative financing. The firm added the unwinding will not result in any sale of OUE shares by Golden Concord.

"We expect the unwinding of the structure to eliminate market concerns over the deal," Bank of America Merrill Lynch said in a report.

"With uncertainties removed and assurance that no further derivative contracts have been entered into, we believe the stock will see a near-term re-rating," it added.

The bank maintained its buy call on OUE, which it said was trading at a 50 percent discount to revised net asset value.

Source: Reuters

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Vested

Property developer Overseas Union Enterprises may be in focus after it said it was proposing to adopt a share purchase mandate to allow it to acquire its issued shares.

It will be convening an extraordinary general meeting to seek shareholders approval for the mandate.

Source: Reuters

[winston]

Vested

OUE: Proposed share purchase mandate. OUE is proposing to adopt a share purchase mandate to enable the company to purchase or acquire its issued shares. The company will be convening an extraordinary general meeting (EGM) to seek shareholders approval for the proposed adoption of the share purchase mandate. (Source: Company)

Comment: We view the move positively as OUE’s share price is currently trading at a steep 25%/46% discount to its books and our FY11 RNAV.

The share buyback program will help in providing stability to share prices and raise the confidence among investors under current volatile market conditions.

Under Singapore laws, the total number of shares that may be purchased under a share purchase mandate is limited to 10% of the total number of company shares.

Source: UOBKH