Vous êtes sur la page 1sur 1

Follow Up Analysis on UEs and STCs Intention to Acquire WBL

My writing intention is to raise market participants awareness on Straits Trading and WBL. This article is meant to get the reader to have better idea of how much these stocks should be worth. I am regretful if there is some degree of deviations from actual results due to unforeseen future circumstances. You, the reader, have your own responsibility to perform due diligent before you make a decision to buy stock. If you have any opinion or clarification on this piece of article, you are welcome to email me at tonydelpiero10@hotmail.com As STCs offer to acquire entire stocks which is required by takeover code has expired at 1 March 2013, which is set by STC, Ms Chew, the chairlady of STC, told the local media that she has no intention to extend the offer and revise the share price. STC even agree with the share valuation indicated by KMPG, the financial advisor for WBL with regards to WBL acquisition. It is surprising to find that 0.26% of WBL shareholders and 0.05% of WBL convertible bondholders took STCs offer. By logic, it should be 0%. Unfortunately, humans actions most of the time are driven by emotion. It is good thing that STC did not get 50% for its given offer. Third Avenue Management LLC, as expected, took STCs share swap offer. In its recent annual letter, it used to own STC shares with the view that it is undervalued with respect of asset valuation. Now, it has STC shares. This implies that Third Avenue Management LLC thinks there is value in STC to be unlocked in the future. It appears that when Ms Chew pointed that one of two STCs offer, 1.05 share exchange for 1 WBL, which is worth $4.15 per share is higher than UEs initial all-cash offer of $4 per share, UE revises its offer to $4.15 per share. It happens after UE got its majority of shareholders approval (97.02%) to buy WBL shares today (12 March 2013). In addition, UE gives sweet topping on the deal $4.15 will not be adjusted for this year dividend from WBL. It is no doubt that UE is anxious to own WBL shares as soon as possible. Ms Chew underlines her intention that STC will not sell its 44.6% stake in WBL to UE. Refusal to revise the offer price and sell its 44.6% stake is big positive to STC shareholders. It is almost equivalent to Warren Buffetts attitude not to overpay any good companies he is interested in. In the Edge article, she wishes to manage STC just like Berkshire Hathaway(BRK) a portfolio of good companies that generate good returns. STC is financially strong. Despite of STC making net loss for the year 2012, it still pay $0.04 dividend per share, which is the same as last years dividend. This demonstrates that STC is shareholder-friendly although it differs from Berkshire Hathaway with respect to dividend payout policy. The dividend payout is likely to be financed by upcoming quarterly profit for given company law. We can see that the main driver of STCs yearly profit is resource division. WBL in the income statement as share of result of associate should bring significant impact on net profit for the year 2013. The minority shareholders including me should be holding WBL shares. There is a good possibility that UE may revise the price to acquire our shares once again. It should be at least in line with KMPGs price range rather than UEs preferred offer. UE obtains loan from OCBC to finance partly the cost of acquiring WBL shares. The supporters of UE are OCBC, Great Eastern, Lee Group, and Wong Hein Jee who is a director of the UE. Singapore government announces on 25 February 2013 that the public will have to pay more cash upfront on top of 5 years car loan and change in Additional Registeration Fee (ARF). It is sign of contractionary monetary policy probably to cancel some or all of the effects of expansionary fiscal policy. In my opinion, it is much more effective than Certificate of Entitlement (COE). But COE is not removed.

Source: WBL Annual Report 2012 We can see that Renault, Volvo, Jaguar, and Land Rover are the types above average Singaporeans can afford before 25 February 2013. The negative impact will be seen in slow and lag fashion. However, Infiniti and Bugatti which only rich people (beyond average Singaporeans) can afford to buy should not have such impact. Car sales in China, Hong Kong, Indonesia, Malaysia, and Thailand should be robust due to insatiable demand. WBL reported that it made first quarter loss for the fiscal year 2013 due to increase in financial expenses. It is probably the result of poor financial management on exchange rate and interest rate exposure. Surprisingly, its balance sheet gets stronger, probably increasing its asset power. In short, WBL shareholders should hold until UE offers better price. Disclosure: I have long position in WBL, STC, and BRK.B and no position in UE.