2/05/01 - Softbank International Investment (0648) - TRADING BUY
Source from Tai Fook Securities
Summary
Softbank International Investment will acquire 51% of e2-Capital Holdings Securities division e2-Capital Securities for a consideration of $318.5m. The valuation implies a total value of $625m for e2-Capital Securities, making it one of the most highly valued local brokerages in Hong Kong.
Synergy between Softbank and its newly acquired investment arm will be highs, with the new bud bringing with it a more visible revenue base, enhancing Softbank's investment value. We are upgrading the company to TRADING BUY.
Table 1
FOR TABLE 1 CLICK ON LINK (There is no other Table and Table 1 is Just financial stuff which we already know is lousy!)
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Highlights
Softbank International Investment will acquire 51% of e2-Capital Holdings (0378.HK, $0.47) Securities division e2-Capital Securities for a consideration of $318.5m. the deal will be settled by $130m in cash and the rest of $188.5m with the issuance of 192m new shares to the vendor at $0.98 cash each. The deal will be financed by a $130m cash injection from parent company Softbank Corp in Japan by subscribing to 132.7m new shares at $0.98 each. Its stake in Hong Kong listed subsidiary will be diluted from 55% to 52.9% after the transaction, while e2-Capital Holdings will own 8.7%.
E2-Capital Securities is principally engaged in the business of Investment banking, securities brokerage, and portfolio management. It made a net profit of $6.2m in 1999, compared to a net loss of $57m in 1998. E2-Capital was the financial adviser of Softbank when it acquired the listing shell of Cheung Wah Development in January 2000.
For comparison, the FY00 P/E of Industrials peers Tai Fook Securities Group (0665.HK, $1.46) and SW Kingsway (0188.HK, $0.81) is 2.5x and 4.8x respectively. Their sizes are $713m and $539m respectively. Commenting on the valuation of the latest deal, Softbank CEO Yoshitaka Kitao remarked: "The consideration is relatively higher, but we believe it could bear good fruit in the future.
We are optimistic on the speculative interest of Softbank, as its parent company is the largest Internet based company in the Asia. So , we are upgrading our recommendation to a TRADING BUY.
If you did not click on the link before, click now and you will see the horrible SBISF chart.LOL
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