http://www.straitstimes.com/archive/...atise-20121208

Property counters all the rage amid SC Global bid to privatise

Published on Dec 08, 2012

By Yasmine Yahya


FOOD-RELATED shares have been the flavour of the month as investors anticipated more buyouts following Fraser & Neave's mega deal, but investors got a new rabbit to chase this week.

It was set running by SC Global's announcement on Wednesday that it will go private.

Investors took it as an indication that other mid-sized property developers might go the same way and piled in. The activity has sent the shares of several listed developers to multi-year highs in the past two days.

SC Global chief executive Simon Cheong is offering $1.80

a piece for all outstanding ordinary shares in the firm - a 39.5 per cent premium over the highest closing price for the developer's shares in the previous 12 months.

SC Global shares responded by shooting up almost 50 per cent to $1.805 on Thursday, the day after the announcement, and closed at $1.80 yesterday.

The euphoria has hit other mid-sized developers. Bukit Sembawang Estates has risen 4 per cent since Wednesday to a four- year high of $6.15 yesterday.

Wing Tai gained 3.4 per cent over the two sessions to $1.83, a two-year high. Wheelock Properties rose 4 per cent to a year's high of $1.985 the day after SC Global's announcement, before slipping back to $1.97 yesterday.

United Engineers, meanwhile, climbed 5 per cent to a four-year high of $2.95 on Thursday, and slipped to $2.89 yesterday.

"I do think we are likely seeing some punting on smaller property stocks in reaction to SC Global's privatisation move," said AmFraser Securities research analyst Sarah Wong.

Maybank-Kim Eng analyst Ong Kian Lin agreed, saying that SC Global's move has revived market speculation that other mid-sized developers will follow suit.

"Some of these developers are trading at a sharp discount compared with their RNAV (revalued net asset value)," he noted.

Ms Wong said investors would do well to study the stocks before jumping on the bandwagon.

"Privatisation exercises may not be uncommon, but there has to be some catalysts prompting management or major shareholders to do so, like in SC Global's case," she said.

"If investors want exposure, it is still best to stick with fundamentals - go for developers that trade at deep discounts to RNAV and have decent property portfolios."

CIMB Research analyst Lee Syn Yi added that another indicator to watch for is how big a stake the parent company holds in the developer.

If a parent or majority shareholder owns a sizeable chunk of the developer, it would be easier to take it private.

However, this "privatisation fever" might have the reverse effect, Ms Lee noted.

"The more investors think it will happen, the more they will buy into these firms and so their share prices will go up. This means their value will go up and thus it would become less likely that a privatisation would happen."

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