Delong Holdings (DLNG SP, $3.10, SELL): Time’s nearly up. Just under one month is left before the call/put option between Evraz and Delong's major shareholder, Best Decade expires on 18 Aug 08. We believe the Chinese government is unlikely to approve Evraz's proposed takeover of Best Decade's stake in Delong. We recommend selling Delong given expensive CY09 P/E of 27x against peers' 7.5-10x. Our target price is S$2.09, based on 2.3x CY08 P/BV.
Price is holding up in the hope of a successful takeover. With the expiry of the option, price is likely to drop due to Delong expensive valuation compared to its peers. Do take care.
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