All three local banks, buoyed by higher-for-longer rates, have reported record earnings, and to reflect this, their share prices are trading at or near record levels as well.
DBS Group Holdings leads the pack with its market cap of more than $100 billion while Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank U11 (UOB) are significantly behind, with their market caps at $65 billion and $52 billion respectively.
Besides the differences in market cap, UOB and OCBC differ from DBS in another aspect: Despite what some might believe are lofty share prices, they are actively buying back their own shares.
For OCBC, the most recent buyback was on June 5 when it acquired 375,000 shares on the open market at $14.34 each. This brings the total number of shares bought back under the current mandate to nearly 4.1 million shares, equivalent to 0.074% of the total share base. Under the previous mandate, the bank bought back a total of 14.8 million shares, equivalent to 0.091% of the total base.
For UOB, the most recent buyback was also on June 5 when it acquired 28,000 shares on the open market at between $30.67 and $30.84 each. Under the current mandate, it has bought back 560,000 shares so far, equivalent to 0.0334% of the total share base. Under its previous mandate, a total of 5.1 million shares were bought back.
According to Bloomberg data, out of the 15 analysts who actively cover OCBC, eight of them rated this stock “buy” or equivalent, versus seven with a “hold” or similar call. Their target prices ranged from as low as $13.78 in the case of Nick Lord from Morgan Stanley to as high as $18.10 by UOB Kay Hian’s Jonathan Koh.
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For UOB, of the 15 calls, there are 10 “buys” or equivalent, with the remaining at “hold” or similar. The most bearish was Harsh Wardhan Modi of JPMorgan, with his $30 target price, while the most optimistic was CLSA’s Neel Sinha whose target price is $39.70.
Largest shareholder raises Oceanus stake
Alacrity Investment Group, the largest shareholder of Oceanus Group 579 , has further raised its stake recently. On May 30, it acquired 30 million shares for a total of $300,000 from the open market, which works out to 1 cent each. The following day, it acquired another 25 million shares for $265,000 or 1.06 cents each. Following these two transactions, Alacrity now owns 4.43 billion shares or 17.25% of the company.
Alacrity has two directors: Bryan Tan Jie and Cleveland Cuaca, who sits on Oceanus’ board as a non-executive non-independent director too.
Under CEO Peter Koh, Oceanus has restructured itself from a loss-making abalone farmer to a regional distributor of foodstuffs and other consumer products. Season Global, its key operating subsidiary in China, has an extensive network within China.
On May 29, Oceanus signed an investment intention agreement worth some RMB200 million ($38.1 million) with partners from Shaoxing, a town in China renowned for its ancient heritage of producing yellow wine or huangjiu.
Under the terms of the agreement, signed with the Shaoxing Huangjiu Town (Dongpu) Development and Construction Management Committee, the local partner will tap on Oceanus to import a wide range of alcohol and use Shaoxing as a key distribution node. In addition, Oceanus will also help Shaoxing export and market its range of local yellow wine. Via this partnership, the local partner will import alcohol distributed by Oceanus, and also provide access to logistics and other services.
Peter Koh, Oceanus’ group CEO says the company’s extensive distribution network is recognised by many local governments and provinces in China. “We are often approached by various municipalities to support cross-border trades,” he says.
