STOCKWATCH: DBS -- 2 (acquisition may involve another Guoco asset: analyst)

At 4:38 pm, DBS was down 1.50 sgd at 15.10 on 5.96 mln shares.      The Straits Times index was down 88.52 points at 1,581.91.      An analyst with a regional brokerage said DBS is more likely to acquire a  different financial asset of Dao Heng shareholder Guoco Group, rather than  Dao Heng Bank, although he said Dao Heng would be a good acquisition for DBS.      However, he said the deal would only be considered positive if the price  was right.      "I do not want DBS to overpay although Dao Heng does have a healthy  return on equity."      If DBS acquires Dao Heng Bank, it would also bolster DBS' position in  Hong Kong, where it owns DBS Kwong On.      Another analyst with a local brokerage said that although the likelihood  of the deal between DBS and Guoco is high, the reported price of a three  times book for Dao Heng is way off the mark.      "DBS can ill-afford to pay three times book for Dao Heng Bank, which  would cost a whopping 39.60 bln hkd for a 100 pct stake, equivalent to 45.0  pct of DBS' market capitalisation," he said.      "It will also result in a goodwill of 26.40 hkd, which if amortised over  a 25-year period, will shave a hefty 250 mln sgd from its earnings," he said,  estimating that DBS' pretax profit would be reduced by 15.0 pct annually if  it were to pay for Dao Heng at the reported price.    "Wary of the lack of success in its earlier acquisitions and well aware  that it has grossly overpaid for its stake in the Bank of Philippine Islands,  DBS will be careful not to commit the same error," he said.			

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