Who are the winners in PPL deal?

SINGAPORE (Aug 24): DBS Group Research is “positive” on both Sembcorp Marine and Yangzijiang Shipbuilding after the former’s US$115.1 million ($155.7 million) acquisition of the remaining 15% stake in PPL Shipyard from a company linked to Yangzijiang.

In a Wednesday note, DBS analyst Ho Pei Hwa considers it a “win-win deal”, even though she notes that the transaction was “immaterial” to both companies as the transaction value is 5.6% and 2.3% of SembMarine and Yangzijiang’s respective market capitalisations.

Ho notes that having full control of PPL Shipyard accords SembMarine better flexibility in terms of yard management and would simplify the approval process for any future M&A or consolidation activities involving the yard. She has a “fully valued” rating on SembMarine with a target price of $1.20.

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