Wing Hang Bank sale to OCBC boost stock value

EPS of HK$7.17/share is beyond expectations.

According to CCB International, Wing Hang Bank (WHB) reported FY13 EPS of HK$7.17/share, above the estimate of HK$7.00 and consensus of HK$6.93.

The earnings beat was driven by better-than expected credit provisioning and a strong top-line which more than offset higher-than-expected costs.

Here’s more from CCB:

Pre-provision operating profit of HK$2.2b was largely flat (+1% YoY) as earnings were boosted by property disposal gains (HK$250m) related to the consumer finance business.

The reality is that fundamentals are secondary as a potential sale to OCBC is now the key driver of value.

As announced by WHB in late February, the exclusivity agreement for the two parties to negotiate a deal has been extended to 31 March 2014.

Given that the agreement has been extended twice, we believe a deal is very likely as reflected in our valuation.