STOCKWATCH: Public Bank unit JCG sharply higher on takeover rumours

HONG KONG (AFX-ASIA) - JCG Holdings Ltd shares were sharply higher in late afternoon trade on speculation that majority shareholder Public Bank Bhd will sell its stake in the company, dealers said.

At 3:46 pm, JCG was up 0.375 hkd or 8.24 pct at 4.925 hkd on volume of 6.70 mln shares.

Tony Liu, banking analyst with DBS Securities, said JCG was up on speculation that GE Capital is interested in buying a stake in JCG.

"I just heard some rumours that GE Capital is interested in acquiring JCG," Liu said.

Analysts said JCG is the largest non-bank consumer finance company in Hong Kong, with an extensive branch network. 

It targets individuals with a solid income stream and temporary cashflow needs such as paying for education or medical expenses, they said.

JCG is 55.4 pct owned by Malaysia-listed Public Bank Bhd.

"This makes it less vulnerable to cyclical fluctuations in retail sales or consumer spending," Liu said.

He said the company remains an attractive value play. 

It is now trading at a price to book value of 1.1 times, while its return on equity is about 19 pct, he said, adding that his price target on the stock is 6.00 hkd.

Steven Chan, banking analyst with GK Goh, said he heard CITIC Ka Wah was bidding for JCG.

"Maybe CITIC Ka Wah is not bidding for HKCB but is interested in buying JCG," he said.

He said fair value for JCG should reach about 8.00 hkd a share given speculation that the company will be sold at a price-to-book value of over 2 times.

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