United Engineers (UE)/ UE E&C

United Engineers (UE)/ UE E&C: UE will be holding its EGM this Friday, for the sale of its 68%-owned UE E&C to Southern Capital group at $1.25/share. With the current share price of UE E&C currently trading above the offer price at $1.29, it'll be interesting to see how the deal pans out, given that Southern Capital will be making an unconditional offer for the remaining 36% of UE E&C, after it had received 74% irrevocable undertakings on its offer. On one side, there may be a possible angle for a counter-offer, after UE E&C's second largest shareholder raised its stake from 4.9% to 6.1% via the market at prices above the offer price of $1.25. However, there is also a possibility that a potential counter bid may not come through and share price of UE E&C will move back towards the offer price. Ultimately, the sale of UE E&C would pave the way for a potential sale of UE's remaining property assets, after the successful divestment of its other businesses in the past three months. With just the property assets, it may be easier for any potential bidders to conduct their due diligence. At $2.90, UEL valued at a 12% discount to consensus RNAV of $3.30, based on property valuations as at Dec 2013.