Yuanta Financial Holding Co (元大金控) said yesterday it expected to make a profit of NT$7.19 billion (US$245.8 million) by selling its 29.12 percent stake in Singapore-listed brokerage Kim Eng Holdings Ltd (金英控股) to Malaysia’s biggest bank as part of its investment plan.
The company’s board yesterday approved the divestment plan to sell the 168.48 million shares in Kim Eng Holdings to Aseam Credit Sdn Bhd, a subsidiary of Malayan Banking Bhd (also known as Maybank), Yuanta Financial executive vice president Chuang Yu-de (莊有德) said in a stock exchange filing.
PENDING APPROVAL
These shares were owned by the Taipei-based financial holding firm’s two subsidiaries — Yuanta Securities Corp (元大證券) and Yuanta Securities Asia Financial Services Ltd (元大證券亞洲金融) — and they were sold for S$522.28 million (US$403.9 million), or S$3.10 per share, Chuang said.
Yuanta Financial said the deal was pending regulatory approvals and the company expected to book the profit in four to six months, according to the filing.
Boosted by the divestment news, shares of Yuanta Financial jumped 6.34 percent yesterday, outperforming the local main bourse’s 0.42 percent rise, to close at NT$22.65 on the Taiwan Stock Exchange.
ONE-OFF GAIN
The one-off gain of NT$7.19 billion from the share sale would equal about 88 percent of what Yuanta Financial earned last year. According to a company statement issued on Wednesday, Yuanta Financial last year made NT$8.15 billion in after-tax profit, or NT$1.01 per share, its highest since 2007.
Among its subsidiaries, Yuanta Securities earned NT$5.01 billion last year, followed by Yuanta Securities Finance Co’s (元大證金) NT$1.86 billion and Yuanta Bank’s (元大銀行) NT$1.31 billion, the statement showed.
Even so, the share sale in Kim Eng also means a loss of about NT$600 million a year for Yuanta -Financial in equity income, Citigroup analyst Bradford Ti (鄭溫煌) said in an investment note yesterday.
Kim Eng, a regional leader in retail broking, has a substantial presence in several key regional markets such as Thailand, Indonesia, the Philippines and its home market of Singapore.
“Although the sale means Yuanta will lose its broking exposure in Southeast Asia, albeit a passive one, we note it also frees up additional capital it can use to invest in China once rules permit,” Ti wrote in the note.
Taiwanese brokerage firms are allowed to invest up to 40 percent of their shareholders’ equity in overseas investments.
Following the completion of the share sale, Yuanta could see its capital quota available for China investment increase by about NT$5 billion to reach NT$20 billion, Ti said.
Citigroup maintains its target price of NT$26 for Yuanta Financial.
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