Chong Hing yardstick for HK bank M&A

Yue Xiu Group’s possible purchase of Chong Hing Bank looks reasonably priced given the slowdown in mainland China and competition in Hong Kong, analysts said on Thursday, after trading in the shares of the small, family run bank was suspended, pending an announcement.

Analysts estimated the sale value at around 2.1 times 2013 price-to-book, based on Chong Hing's October 23 closing price -- slightly above the average 1.93 multiple paid for Hong Kong-based banks in recent decades, according to analysts at Goldman Sachs. 

The expected valuation of Chong Hing, which has a market capitalization of about US$2.09 billion, is nonetheless below that of some...