Great Eastern

Great Eastern: DMG notes the sale of its stakes in FNN and APB is unlikely to mark the end of GEH’s non-core divestment programme. Remaining non-financial holdings incl stakes in WBL and UE, which the house believes will eventually be divested to reinvest in its core financial services business. Believes investors could look forward to special dividends arising from the divestment gains, in addition to a base div of 3%. Believes GEH offers a potential privatization play as OCBC seeks to integrate its wealth mgt platform and realize revenue synergies from an OCBC-GEH merger. Says the stock is now attractively priced at 0.9x P/EV (embedded value) vs comparable transactions, and offers a compelling invmt proposition with potential upside of 60%. The house has a Trading Buy rating, with TP pegs at $24.50, the mid point of the $22.50 – 26.40 range, derived based on 1.401.7x P/EV for its core insurance operations and adding back the excess capital within the group.