United Engineers

United Engineers: CIMB reiterates the sale of non-core assets will be a re-rating catalyst for UE. The latest disposal of its auto division for $455m will reduce net gearing to ~39% by end FY14, factoring in the sale of MFS and the upcoming sale of orchardgateway. It also raises UE's appeal as a potential takeover target for Charoen as the auto segment may have limited synergy with his S'pore properties. UE's assets are now largely properies, ie 64% investment property and ~20% residential devs in S'pore and China. Any potential takeover at 5-15% discount to RNAV would value UE at between $3.02 and $3.38 per share. The house arises TP to $2.85 from $2.53, keeps Hold rating.