United Engineers

Difference between F& N and UE.

Charoen bought 22% of F& N from OCBC,at the point of purchase, he need not make an offer to public for the remaining shares.

In UE' s case, once the price with OCBC is agreed upon, and Charoen buys the 34% stake in UE, a general offer must be made to remaining shareholders of UE(it is mandatory under laws).

After Charoen made the offer of $8.88 per F& N share to the public in Sep 2012(same price paid to OCBC), he was snubbed by the shareholdrs. He managed to bag only 10% more shares bringing his stake to 40% before he made the final bid of $9.55 in Jan 2013 after being challenged by OUE (OUE offered 9.08).

Noting that in June, the F& N price was $6.34, the takeover bid of $8.88 already gives the shareholder a gain of $2.54.

Kyoto2008 ( Date: 22-Aug-2014 21:01) Posted:

Events revisited on F& N takeover by Charoen.

5th Jun 2012 Price of F& N: 6.34 (Vol 1.17mln)

20th Jun Charoen discuss with OCBC to buy over stakes (P: 7.00, vol 1.02mln)

19th Jul OCBC announces sale of F& N and APB to Charoen. (P:7.6, vol 1.06mln)

14th Aug (P:8.55, vol 318ml)

19th Oct (P: 9.29, vol 11.5mln)

21st Jan 2013 (P:9.74, Vol 98mln)

History is repeating itself, don' t miss this ride!

What I meant was that Charoen knows he has to buy the balance of 66% from the other shareholders and it won' t be easy as many would not sell cheaply. The fact that he went ahead to secure the 36% from OCBC shows he is willing to pay to get UE.

If he offers $3 to UE shareholders, other predators would be interested coz UE is doing very well and the property portfolio is a nice addition. But even without a bidding war, Charoen would have a hard time securing the balane 66%.

UE is in a better position than F& N in this regard, to extract maximum price from the buyer.

We know all this, the buyer (Charoen) has to pay a higher price to mop up the balance in order to hive off the properties. The fact that he went ahead with OCBC already shows that UE is worth a lot more than $3. Think about it.

Kyoto2008 ( Date: 25-Aug-2014 12:08) Posted:

Without a competitor, OCBC could sell their 36% to Charoen (and this price cannot be any price plucked from the sky, consultant needs to be involved to give a fair value price which is likely above $3) . After Charoeon secures the 36%, he needs to buy the balance from the market. This is where the fun starts. If you are a shareholder would you sell cheap?

F& N there was some horse trading with Heineken, Charoen give up APB for F& N. In UE, this won' t happen, Charoen needs to buy from the shareholders.

So eventually, it could be a $1.5 to $2 gain from $3. Anything below $3 is a bargain.

oscar10 ( Date: 25-Aug-2014 11:39) Posted:

Besides all these fundamental analysis, is there any other competitor beside Thai tycoon? If not.. Who is willing to buy at high or even higher price?

Based on F& N, there are a number of competitors. Here?

Without a competitor, OCBC could sell their 36% to Charoen (and this price cannot be any price plucked from the sky, consultant needs to be involved to give a fair value price which is likely above $3) . After Charoeon secures the 36%, he needs to buy the balance from the market. This is where the fun starts. If you are a shareholder would you sell cheap?

F& N there was some horse trading with Heineken, Charoen give up APB for F& N. In UE, this won' t happen, Charoen needs to buy from the shareholders.

So eventually, it could be a $1.5 to $2 gain from $3. Anything below $3 is a bargain.

oscar10 ( Date: 25-Aug-2014 11:39) Posted:

Besides all these fundamental analysis, is there any other competitor beside Thai tycoon? If not.. Who is willing to buy at high or even higher price?

Based on F& N, there are a number of competitors. Here?

Was there a report of some interest from OUE? But even if there is no competitor, wld the major shareholders sell < 3, given the potential intrinsic value not priced in at 2.79? Don' t think OCBC are that desperate, are they. They didn' t initiate a fire sale anyway. So, they' d probably agree only if the offer is attractive, which 2.79 may not be.

oscar10 ( Date: 25-Aug-2014 11:39) Posted:

Besides all these fundamental analysis, is there any other competitor beside Thai tycoon? If not.. Who is willing to buy at high or even higher price?

Based on F& N, there are a number of competitors. Here?

Sorry, made a mistake, long term debt is 1.7 bln, short term 1 bln. They have cash plus assets for disposal totalling 2.1bln. Still very comfortable debt level.

Besides all these fundamental analysis, is there any other competitor beside Thai tycoon? If not.. Who is willing to buy at high or even higher price?

Based on F& N, there are a number of competitors. Here?

UE may not say very much. UE took over WBL in 2013 and are in the process of realigning businesses.

UE sold Bizpark East, but bought freehold comm properties at 450 and 452 Alexadra (former HP?), they are not desperate for cash, far from it.

It is a company that will be reaping profits from their property portfolio. Reason why predators are eying it.

F& N price appreciation from 6 plus to 9.95 is about $3 per share, it took about 6mths and was complicated by Heineken taking over Asia Pacific breweries, the takeover was $13plus bln.

UE' s would be below $2bln, and there are fewer complications. Shareholders who did not accept 8.88 from Charoen eventually got additional $1 plus per share when he upped the price to $9.95.

Generally, mkt feels the deal will go through, willing buyer willing seller.

Those who are in, likely sit on windfall. Those not in, it' s still cheap below $3.

Yes, I think easily > 3/share. Was hoping for some dip to enter and make abt 10%. But don' t know what' s next now.

Kyoto2008 ( Date: 25-Aug-2014 10:32) Posted:

Net Asset Value is not the only parameter to be considered in arriving at UE' s fair value.

It is a profitable company, cash of 744mln against a debt of 1bln. Plus assets avail for disposal is about 1.5 bln. Looks very comfortable with liquidity and debt.

It would be a surprise if UE is valued at NAV alone, based on the fundamentals, UE is an undervalued company with growth potential, with a low PE way below it' s peers.

Not forgetting the teochew has to buy 66% from the market after OCBC agrees to sell (likely above 2.79). Remember F& N, Charoen offered 8.88 to the public and later up the price to 9.95 when OUE came in.

Who wouldn' t want to buy a profitable co at a low price?

agree!

Kyoto2008 ( Date: 25-Aug-2014 10:16) Posted:

The halt was called by UE, pending an announcement.

OCBC may not be able to agree to price until they get consultant advice, otherwise shareholders may query why they sell low.

As UE is in a strong position having recently announce , no reason for OCBC to sell below NAV of 2.78, or rather 2.79 as stated in the UE document released on 14th Aug regarding their quarterly results:

ysh2006 ( Date: 25-Aug-2014 09:00) Posted:

Either two thing : 1) Talk fail no RTO 2) RTO sucessful price only $ 2.3x only ? (Thai guy stingy) 3) RTO price $3.xx ..Which one ?..

The halt was called by UE, pending an announcement.

OCBC may not be able to agree to price until they get consultant advice, otherwise shareholders may query why they sell low.

As UE is in a strong position having recently announce , no reason for OCBC to sell below NAV of 2.78, or rather 2.79 as stated in the UE document released on 14th Aug regarding their quarterly results:

ysh2006 ( Date: 25-Aug-2014 09:00) Posted:

Either two thing : 1) Talk fail no RTO 2) RTO sucessful price only $ 2.3x only ? (Thai guy stingy) 3) RTO price $3.xx ..Which one ?..

rlong8288 ( Date: 25-Aug-2014 08:53) Posted:

halt trading

Samling Said to Near Agreement to Purchase Jaguar Dealer Wearnes

By Joyce Koh Aug 25, 2014 8:41 AM GMT+0800

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Samling Group, the Malaysian plantation owner and property developer, is nearing a deal to buy the luxury car distributor owned by Singapore&rsquo s United Engineers Ltd. (UEM), people with knowledge of the matter said.

United Engineers aims to sign an agreement as early as this week to sell Wearnes Automotive Pte for as much as S$450 million ($360 million), one of the people said, asking not to be identified as the talks are private. The sale includes real estate owned by Wearnes, they said.

Samling competed for Wearnes with Hong Kong trading house Swire Pacific Ltd. (19) and Dubai&rsquo s Al-Futtaim Group, which runs retail chains in Singapore including Royal Sporting House, according to people with knowledge of the process. Shares of United Engineers were halted from trading today.

Wearnes, founded in 1906, distributes Jaguar and Bentley cars in Singapore and Indonesia, according to its website. It also runs Volvo dealerships in Hong Kong and mainland China.

Spokesmen for for the companies declined to comment or didn&rsquo t immediately respond to queries from Bloomberg News.

Samling distributes Bentley, Mitsubishi and Honda vehicles in Malaysia, the website shows. United Engineers, whose businesses include real estate and construction, bought Wearnes&rsquo parent company WBL Corp. last year for $725 million including debt, data compiled by Bloomberg show.

To contact the reporter on this story: Joyce Koh in Singapore at [email protected]

To contact the editors responsible for this story: Philip Lagerkranser at [email protected] Ben Scent

Either two thing : 1) Talk fail no RTO 2) RTO sucessful price only $ 2.3x only ? (Thai guy stingy) 3) RTO price $3.xx ..Which one ?..

rlong8288 ( Date: 25-Aug-2014 08:53) Posted:

halt trading

Kyoto2008 ( Date: 23-Aug-2014 06:59) Posted:

What price should UE be as fair value?

Take a look at industry peers:

Capitaland (PE: 17.32, Book value per share: $3.6943)

CityDev (PE: 16.32, BVPS: 8.6723)

Wheelock (PE: 42.35, BVPS: $2.645)

Hotel Properties (PE: 15.25, BVPS: $3.3911)

UE (PE: 9.9 - based on Fri' s closing price of 2.76 and EPS 0.2785 , BVPS: $2.78)

It is apparent that each company has a different BVPS and the difference is very significant even within peers in similar industry. To base a takeover price purely on BVPS does not seem to be a balanced way of valueing a company, the PE is equally important. If we use a range, drawing from peers, a PE of 15.25 to 42.35, UE' s fair valuation price could be $4.1775 to $11.79.

halt trading

Kyoto2008 ( Date: 23-Aug-2014 06:59) Posted:

What price should UE be as fair value?

Take a look at industry peers:

Capitaland (PE: 17.32, Book value per share: $3.6943)

CityDev (PE: 16.32, BVPS: 8.6723)

Wheelock (PE: 42.35, BVPS: $2.645)

Hotel Properties (PE: 15.25, BVPS: $3.3911)

UE (PE: 9.9 - based on Fri' s closing price of 2.76 and EPS 0.2785 , BVPS: $2.78)

It is apparent that each company has a different BVPS and the difference is very significant even within peers in similar industry. To base a takeover price purely on BVPS does not seem to be a balanced way of valueing a company, the PE is equally important. If we use a range, drawing from peers, a PE of 15.25 to 42.35, UE' s fair valuation price could be $4.1775 to $11.79.

What' s UE' s TP?

Book value per share is 2.78. CIMB analyst suggested a 20% discount to NAV.

After buying the 34% from OCBC and co,Charoen need to mop up another 17% to have a 51% ownership. So what' s the likelihood the shareholders will sell at 20% below NAV?

List of large shareholders:

F & N price chart (unadjusted):

Events revisited on F& N takeover by Charoen.

5th Jun 2012 Price of F& N: 6.34 (Vol 1.17mln)

20th Jun Charoen discuss with OCBC to buy over stakes (P: 7.00, vol 1.02mln)

19th Jul OCBC announces sale of F& N and APB to Charoen. (P:7.6, vol 1.06mln)

14th Aug (P:8.55, vol 318ml)

19th Oct (P: 9.29, vol 11.5mln)

21st Jan 2013 (P:9.74, Vol 98mln)

History is repeating itself, don' t miss this ride!

United Engineers in play as OCBC enters talks to sell holdings

Written by Bloomberg

Friday, 22 August 2014 08:39

United Engineers may be poised for a takeover after Oversea-Chinese Banking Corp. said it&rsquo s in talks to sell its stake in the Singapore property and construction company.

OCBC, Southeast Asia&rsquo s second-largest lender, and its insurance unit Great Eastern Holdings Ltd. were approached about a possible offer for their United Engineers shares, they said in a joint stock exchange filing yesterday without naming the suitor. Thai billionaire Charoen Sirivadhanabhakdi is in talks to buy the holding, Bloomberg News reported earlier.

The discussions are at an early stage, according to the announcement. OCBC, Great Eastern and the bank&rsquo s founding Lee family together own 34.1% of United Engineers, according to a filing in August last year. Buying more than a 30% stake would trigger a mandatory takeover offer for the company under Singapore rules.

Selling the stake would help OCBC bolster capital after its US$5 billion ($6.2 billion) takeover of Hong Kong&rsquo s Wing Hang Bank Ltd. this year. Companies backed by Charoen have announced US$4.5 billion of acquisitions this year, data compiled by Bloomberg show.

United Engineers shares were halted from trading yesterday after they jumped the most in more than four years, prompting Singapore&rsquo s stock exchange to ask the company to explain the move. The stock was up 7.4% before the suspension, giving the company a market value of $1.6 billion. Trading will resume today, the company said in a separate filing.

OUE Interest
In 2012, OCBC entered talks to sell its holdings in Fraser & Neave and Asia Pacific Breweries to Charoen&rsquo s Thai Beverage Pcl. That touched off a three-front bidding war for the two companies, with Heineken NV eventually buying Asia Pacific Breweries and Charoen beating out OUE for Fraser & Neave in deals that totalled US$15 billion, data compiled by Bloomberg show.

OUE had earlier expressed interest in OCBC&rsquo s stake in United Engineers, though those talks are no longer active, said one of the people. OCBC and its units also control 69% of the company&rsquo s preference shares, according to United Engineers&rsquo latest annual report.

Soammaphat Traisorat, chief executive officer of Charoen&rsquo s Bangkok-based TCC Land Co. unit, didn&rsquo t respond to phone calls or e-mails seeking comment. Spokesmen for OCBC and OUE declined to comment.

Charoen is Thailand&rsquo s richest man with a US$12.7 billion fortune, according to the Bloomberg Billionaires Index. He controls an empire whose businesses span industries from beer to property development.

Selling Assets
Frasers Centrepoint, a developer controlled by Charoen, succeeded this month in gaining control of Sydney-based Australand Property Group in a US$3.4 billion deal, according to data compiled by Bloomberg. His consumer goods distributor, Berli Jucker Pcl, agreed Aug. 7 to buy Metro AG&rsquo s wholesale stores in Vietnam for US$874 million including debt, the data show.

United Engineers, which bought Singapore-based builder WBL Corp. last year for US$725 million including debt, was founded in 1912 as an engineering company that helped build Singapore&rsquo s Shangri-La hotel and historic supreme court.

The company last week said second-quarter profit doubled as it booked income from recently completed residential properties. United Engineers&rsquo properties includes the UE Square shopping mall in central Singapore, and it owns real estate projects in five Chinese cities through WBL, according to the companies&rsquo websites.

United Engineers agreed to sell its MFS Technology business this month for $124 million, and its engineering unit said in March that its parent was in talks to sell its stake. United Engineers is also divesting its luxury-car dealership, according to people familiar with the matter.

OCBC Chief Executive Officer Samuel Tsien said this week that he&rsquo ll look to sell &ldquo non-core&rdquo assets following the Wing Hang purchase. The Singaporean bank plans to raise $3.4 billion by selling shares to existing investors to replenish capital after the acquisition.

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United Engineers

Samling Said to Near Agreement to Purchase Jaguar Dealer Wearnes