DBS

DBS: -1.0% at S$13.66, extending Tuesday's 2.8% drop to become the biggest weight on the STI for a second day after its proposed US$7.3b acquisition of Bank Danamon. On how much further the stock might fall, CLSA note that if you look back to late last year, DBS got a lot of support from investors below book value. There's a lot of valuation support for DBS below $13.00.

Book value is an attractive entry point for DBS, noting book value was around $12.00 at end-2011 and is likely currently around $12.50-$13.00. Among reasons the deal disappointed, "he biggest one was the price. A 52% premium to Danamon's last close appears to be more than most investors had expected. It's a very fully priced transaction and a related-party transaction with Temasek makes the price more sensitive than it otherwise would have been. House has Sell Call with a $13.00 TP.