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UOB KAYHIAN |
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Fu Yu Corp Ltd Returning excess cash
■ Fu Yu Corp Ltd (Fu Yu) is a one-stop plastic components supplier with more than 40 years’ experience. ■ Fu Yu has been back in the black since FY13 thanks to its restructuring efforts. It resumed dividend payments in FY15. ■ We initiate coverage on Fu Yu with a Hold for its FY18-20F dividend yield of 9.3%, as we await improvement in its ROEs from further restructuring.
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Keppel Makes Offers You Can’t Refuse
Our deduction that KEP was potentially acquiring M1 proved correct. The offers are S$2.06 for M1 in a pre-conditional general offer and S$1.91 for KTT in a scheme of arrangement. The deal is earnings-accretive for KEP, and does not overly stretch its balance sheet, given the target shareholding of 50%. SPH sees earnings accretion, but minimal variance to valuation. Axiata remains dissatisfied with the offer price, but we see no impediment to the deal’s success. Offers are fair, ACCEPT OFFERS. |
| OCBC SECURITIES | MAYBANK KIM ENG |
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Singapore Press Holdings: Participating in KCL-led offer SPH has announced that it will join Keppel Corporation Limited (KCL) in making a pre-conditional voluntary general offer for all outstanding shares of M1 Limited (M1) at a price of S$2.06 per share in cash. SPH has undertaken to roll-over its existing 13.45% stake in M1 into Konnectivity Pte. Ltd. (Offeror), which is majority-held by KCL. Upon the close of the offer, SPH’s effective stake in M1 may increase to a maximum of 16.13%. We note that approval from the IMDA is a pre-condition to making this offer. As we understand, SPH would be looking to leverage M1’s mobile platform to offer on demand and ready digital content. Nonetheless, we note that the anticipated transformation (contingent upon a successful general offer) could see dividends from M1 being affected, not only because of the competitive landscape, but also due to the allocation of resources as part of the transformation efforts. We maintain our estimates, HOLD rating and fair value of S$2.52 for now.
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M1 (M1 SP) Attractive General Offer
General offer being undertaken. Maintain HOLD. Keppel Corp and SPH have announced the formation of Konnectivity Pte Ltd as their vehicle for making a general offer (GO) for M1 at SGD2.06. Inclusive of Keppel T&T's stake in M1, the group holds 33.3% of the telco currently. The offer will proceed if the group can increase their stake to over 50%. At a 26% premium to our DCF based (WACC 4.1%, LTG 1%) TP of SGD1.63 and with the prospects of short- to medium-term earnings volatility due to increased competition and a warning of a potential change to dividends, the offer appears attractive in our view. We await shareholder Axiata’s response with regards to its stake but we note that securing the public float vote could bring the group above 50%.
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DBS VICKERS |
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OCBC (OCBC SP) : HOLD Digital quest to grow Indonesia market share
• OCBC NISP embarking on mobile-first strategy and partnerships to grow Indonesia market share • Good traction in mobile app transactions over last year • To offer up to 90% of physical branch functionalities on OCBC NISP ONe Mobile app • Sees highest potential in Indonesia amid scaling up of digital efforts across core markets
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