TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issu...
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JING YANG
01 September 2015
Investors who have been locked in suspended mainland shipping stocks should think twice about the potential merits of a merger.
It is very easy to jump to the conclusion a marriage between Cosco Group and China Shipping Group, the country’s two largest shipping conglomerates, will be a gleeful re-run of the train makers’ unification which earned shareholders a great deal.
Cosco and China Shipping have five listed subsidiaries in Hong Kong and six in Shanghai, Shenzhen and Singapore – a situation that makes it more complex than the China CNR-China CSR merger. The 11 stocks entered a trading suspension en masse from August 11. Three of them are considered flagships, namely China Cosco Holdings, China Shipping Container Lines (CSCL) and China Shipping Development, all of which are A+H dual-listed.
In the recent earnings season, all three reported disappointing results compared to their Hong Kong and foreign peers. What is even more disappointing, perhaps, is none of the companies uttered a peep on the ongoing “material event”, regulatory shorthand for a merger.
“Not a word in these reports about any potential restructuring,” writes Jefferies analyst Johnson Leung. “It is difficult to highlight much material impact from the merger except maybe a monopoly coastal container liner if there is a merger between Cosco and CSCL.”
Interestingly, investors are less enthusiastic in these “real consolidation stories” than they were in the “faked consolidation stories”, or the operational alliances of P3 – which was scuppered by mainland Chinese authorities – and G6, a bloc of six container shipping lines, Leung added.
This may be due to the industry’s dire fundamentals and outlook. Before China’s economic slowdown was widely felt, shipping had already been crippled by a harrowing glut. The state carriers, on the other hand, have not been the smartest players in a cyclical and capital-intensive industry, as shown in their financial records.
“We believe concerns in the market about a global and China [macroeconomic] slowdown will outweigh any positive sentiment on the stock from the potential merger,” wrote Kelvin Lau at Daiwa Capital Markets.
Echoing Leung’s point, Lau added: “As both companies are small, and will stay small even if they merge, we do not expect the new merged entity to have better bargaining power within the industry.”
Lau cut the 12-month target price for CSCL to HK$2.30 from HK$2.90, due to adverse market conditions. CSCL closed at HK$3.11 on August 7, the last trading day before the halt.
Barclays analyst Esme Pao, in contrast, is slightly more upbeat. “We believe that consolidation would benefit profitability and the share prices of potential merger companies,” she wrote.
Still, none of the state shipping lines are favourites of Pao. Her top pick in the Asia excluding Japan transport and infrastructure sector is Orient Overseas (International) Limited, the holding company of Orient Overseas Container Line, run by the family of former Hong Kong chief executive Tung Chee-hwa.
“We believe the company will generate better-than-peers returns given its best-in-class operations,” Pao wrote in a 45-page report on the stock she believes is underappreciated.