STOCKWATCH: ICBC (Asia) higher on expectations of asset injections

HONG KONG (AFX-ASIA) - Industrial and Commercial Bank of China (Asia) Ltd shares were higher on expectations it will acquire part of the assets of parent ICBC's Hong Kong branch, dealers said. At 11:14 am, ICBC (Asia) was up 0.2 hkd or 3.27 pct at 6.30 on volume of 95,000 shares. The Hang Seng Index was up 74.14 points at 13,567.17. "The report about asset injections is likely to boost the price in the short term despite the fact that the plan has already been revealed since the acquisition of Union Bank," Kevin Chan, analyst at Nomura International (HK) Ltd, said. He said the current price has factored in the likelihood of asset injections, with the stock's fair value estimated at about 4.0 hkd per share. The bank plans to acquire about 12 bln hkd worth of assets owned by its parent's Hong Kong branch, according to reports. "The bank is likely to acquire a large part of the assets in the Hong Kong branch but not the whole, plus its forex trading business," Chan said. The securities operation, which is currently owned by ICEA Securities Ltd, a 50-50 joint venture between ICBC and Bank of East Asia, is expected to be excluded from the deal, he added. "It's difficult to assess the effect on the bank in the absence of details such as terms, pricing and financing issues," Chan said. But he said he expects the bank will raise the capital via share placement. ICBC (Asia) has a total asset value of 19 bln hkd, he said. Chan said since the bank is expected to receive about 12-13 bln hkd worth of assets via asset injection and in the process become a much larger bank in the future, its original earnings forecast for 2001 will need to be revised. He said among small- to medium-sized banking stocks, he prefers Citic Ka Wah Bank and HKCB Bank Holdings based on their current fundamentals and relative lack of uncertainties on future business developments. Citic Ka Wah Bank was up 0.05 hkd or 2.1 pct at 2.425 and HKCB Holdings Co Ltd was unchanged at 2.30.

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