Thursday, June 19, 2014
OCBC / Great Eastern
OCBC / Great Eastern: Macquarie believes a reduction of OCBC’s 87% stake in Great Eastern Holding (GEH) would be an easy way for OCBC to unlock shareholder value and could trigger a re-rating for both stocks. Macquarie believes that OCBC could avoid a capital increase and fund the pending Wing Hang Bank (WHB) acquisition by reducing its stake in GEH. At the same time its underlying profitability profile would improve, earnings visibility would be higher and it would not impair the cross-selling story for OCBC. At the moment Macquarie has an Underperform on OCBC with TP $ 8.20. A potential reduction in OCBC’s 87% stake in GEH could fundamentally change the house's investment case .