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Published March 7, 2012

Will Wheelock Properties' parent now take the firm private?

David Lawrence's death also raises leadership question

By MINDY TAN


THE death of Wheelock Properties' David Lawrence last Sunday has again raised the spectre of the possible privatisation of the company by parent Wheelock Group, the future direction of the organisation, as well as its link to Simon Cheong.

'This company has always been one of the potential candidates (for privatisation) and given that David Lawrence has unfortunately passed on, it could be a case for the parent company to consider (privatisation),' said Maybank Kim Eng analyst Wilson Liew. 'But, I'm not sure if it will be immediately done. . . It may be awhile, once the matter dies down, (and) operations settle.'

There is also the question of the stewardship of the company.

A report issued by DMG Partners Research yesterday floated two names - Tan Bee Kim and Tan Zing Yan, executive directors at Wheelock Properties. But while analysts concur on the faces, they are divided over strategy.

'David Lawrence had been more or less passive ever since 2006/07. . . Since then, day-to-day running has mostly been done by the other executive directors,' said Kim Eng's Mr Liew. 'In the past, David Lawrence was known to be quite spot-on in catching market cycles, so one would have expected him to go ahead to replenish his land bank. Be it a change in focus from the parent company, or the fact that he wasn't actively running the company, I think that's what led to the inactivity of the past few years.'

Another analyst disagreed, arguing: 'David Lawrence was quite active in Wheelock (and his demise) could result in a big change in the way Wheelock is run. . . I would think there'd be more positive news flow coming out from Wheelock (moving forward, and it could become) a more actively managed company.'

In February last year, Wheelock Properties announced it was buying five sites in Fuyang City, China for 1.44 billion yuan (S$288 million), with the intention to build around 1,900 residential sites, in a move that shocked many analysts, as noted by CIMB in a report issued on Monday. The bank maintained a 'neutral' call on the counter, citing 'slow high-end residential sales'. However, it noted that Wheelock Properties is bolstered by a strong net cash position and stabilising retail investment properties.

AM Fraser analyst Lau Wei Chong said: 'China did come as a surprise, but similar to other developers, they realised that they could not just focus on Singapore (and) so started branching out. It definitely helps because it diversifies revenue streams and limits concentration risk.' AM Fraser maintained a 'hold' call on the counter, with fair value of $1.89.

Said Kim Eng's Mr Liew: 'The only visible activity we saw (from Wheelock in recent years) was the China acquisitions. That could more or less be the direction going forward if privatisation goes ahead.'

If Wheelock Group does privatise Wheelock Properties, it may consider divesting their shares in Simon Cheong's SC Global, added Mr Liew.

'If you look at the way Wheelock Properties has treated this investment, it has been very passive all the while. In this unfortunate situation, perhaps there may even be a case for Wheelock to consider divesting their stake, if eventually, it were to go down the privatisation route,' he said.

On the local front, Wheelock Properties' Ardmore Three, a freehold 36-storey luxury development located along Ardmore Park, and comprising 84 three-bedroom apartments, is expected to be completed by 2014. Construction and fit-out of the showflat has been completed, and preparation in readiness for the launch is in progress.

Wheelock Properties shares ended trading yesterday down a cent at $1.61.