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<Research>UBS: HANG SENG BANK (00011.HK) Rated at Sell on Potential Upside if HSBC Privatization Proceeds
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HSBC announced its intention to acquire the remaining 36.5% stake in HANG SENG BANK (00011.HK) at $155 per share, as well as the third interim dividend, according to UBS' research report.

This offer represents a significant 30% premium over HANG SENG BANK's last closing price, and implies a PB ratio of 1.8x for FY2025.

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The privatization will not affect HANG SENG BANK's status as an independent licensed bank, but will enhance coordination between HSBC and HANG SENG BANK, resulting in medium-term revenue and cost synergies, according to the company.

The privatization proposal is expected to be completed in 1H26 and requires approval from at least 75% of minority shareholders' voting rights, UBS said.

Based on HKEX (00388.HK)'s shareholding disclosure, there are no other major shareholders besides HSBC. The minority shareholding appears to be highly diversified, mainly consisting of passive funds.

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In addition to the minority interest vote, the regulatory stance on the privatization transaction has not yet been discussed. UBS believed that HSBC has sufficient reason to believe there will be no material regulatory hurdles.

Therefore, UBS rated HANG SENG BANK at Sell, with a target price of $102. After the announcement, HANG SENG BANK's stock price rocketed 26% yesterday (9 October). UBS believed that there is potential upside in its share price if the transaction proceeds.
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