Maximize the Value, GO for Dah Sing

Quiddity Advisors: Dah Sing Banking (2356 HK) languishes and should be let go by Dah Sing Financial (440 HK)

With US$-pegged deposits and a vast Chinese network, BEA is a very clear takeover target. The reason this has not occurred is largely due to the Li family's influence - and ensuing shareholder agreement entanglements - with key shareholders SMBC and CaixaBank.

Not bad for a family with around 7% of issued shares, but with seven board seats out of a total of 15 seats; with one apiece for CaixaBank and SMBC. Arguably, friends of David Li on the board (such as Henry Tang) provide the family with absolute control. It is this complex ownership that has lead critics to label BEA, an under-performer versus peers, as a private fiefdom for David Li.

The banking environment has changed considerably since Chong Hing's Offer in 2013. Expecting 2x P/B for BEA appears a stretch given its ongoing credit control issues. At 0.5x P/B, around its all-time low valuation, this still appears an attractive entry point ahead of possible positive strategic developments.