OCBC

OCBC: (S$8.43) Potential sale of associate Hong Kong Life Insurance
- OCBC's 33% owned Hong Kong Life Insurance could be put up for sale in a deal worth ~US$600m.
- Estimated deal price values the life insurer at ~6.3x P/B, just below the recently completed buyout of Dah Sing Financial's life insurance unit.
- Great Eastern (GE), 87.6% owned by OCBC, is one of the potential bidders.
- Maybank KE estimates that if GE succeeds, OCBC will net a gain of US$158m ($214m) and an effective goodwill of US$442m ($599m).
- Assuming a 15% increase of risk-weighted assets for Hong Kong Life Insurance, OCBC's fully-loaded CET1 ratio is estimated to decline by 55bps to 11.8%.
- Maybank KE maintains its Sell rating on OCBC and TP of $7.20.