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Thread: SGX cautions developers about price projections

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    Default SGX cautions developers about price projections

    Top Print Edition Stories
    Published January 29, 2007

    SGX cautions developers about price projections

    By WONG WEI KONG


    (SINGAPORE) With the property market sizzling at the top end and with talk of record prices with every new launch, the Singapore Exchange (SGX) is keen to remind listed developers of their obligation to observe disclosure standards when they make projections on the selling prices of their projects.

    The exchange will take action if disclosure rules are breached, it said

    BT had asked the SGX for its comments following a commentary the newspaper published last week which argued that property developers should be subject to greater scrutiny and bound by disclosure rules when they make price forecasts for their projects, just as other listed companies are when they make earnings projections.

    Typically, developers make forecasts on the selling prices of their projects to the media but not on SGXNET, the exchange's official electronic dissemination platform.

    'We would like to highlight that all listed companies, including developers, have to observe the same high standards of corporate disclosure,' said Yeo Lian Sim, executive vice-president and head of risk management and regulation at the SGX.

    'The listing manual gives guidance on disclosing material information to analysts, investors, stockholders and media parties, without being faulted for selective disclosure.'

    Under listing rules, material information includes information concerning, among other things, the issuer's property, assets, business, financial condition and prospects.

    The rules also make it clear that if an issuer releases material information to the media but does not announce it to the market via SGXNET, it would be in breach of selective disclosure rules.

    Ms Yeo noted that a price estimation or a target selling price of an individual property launch does not automatically translate into profit forecast for the whole company.

    The number of projects, completion dates, cost factors and take-up rates are some of the other elements that have to be taken into account for making a profit forecast.

    'The property developer, like other listed companies, will judge the materiality of the information at hand and make the necessary disclosure,' she said. 'As such, SGX does not second-guess disclosures of listed companies. If inadequate disclosure comes to light, we will take the necessary action.'

    Said a corporate watcher who works with listed companies: 'We have a situation where other listed companies are so cautious about making any statement that would suggest an earnings projection. If they say anything on earnings to the media or analysts, they have to announce it to the SGX immediately, which will then hold them accountable for what they say. And here we have developers freely making forecasts on the selling prices for their projects without announcing it to the SGX and being held accountable.'

    The property market is so upbeat that target prices for projects are being revised by the week. Two weeks ago, upmarket developer SC Global told the media it hoped to set a new benchmark with the launch of its latest luxury project, the marQ on Paterson Hill, which is expected to fetch prices upwards of $2,800 per square foot (psf). Just a week later, SC Global said in another media interview that it planned to price the project at 'north of $3,000 psf'.

    It is little wonder then that SC Global's shares have surged some 70 per cent since the start of the year and it is the best performer on the Singapore property index.

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    Default SC Global objects to statements in article

    Published January 30, 2007

    LETTER TO THE EDITOR

    SC Global objects to statements in article


    WE refer to the article 'SGX cautions developers about price projections' (BT, Jan 29) and wish to express our strong objection to, and disagreement with, the following statements in the article and the context in which these statements appear:

    'Two weeks ago, upmarket developer SC Global told the media it hoped to set a new benchmark with the launch of its latest luxury project, the marQ on Paterson Hill, which is expected to fetch prices upwards of $2,800 per square foot (psf). Just a week later, SC Global said in another media interview that it planned to price the project 'north of $3,000 psf'.'.

    'It is little wonder then that SC Global's shares have surged some 70 per cent since the start of the year and it is the best performer on the Singapore property index.'

    These statements suggest that SC Global deliberately released information about the selling prices for The Marq for the purpose of causing its share price to increase. This is totally inaccurate and we categorically reject any such suggestion.

    First, the statements in the article contain inaccuracies. SC Global did not state that the selling price of The Marq would be $2,800 per square foot and upwards in its press release on Jan 17, 2007. This press release was posted on the Singapore Exchange (SGX) website on the same date. In that press release, SC Global stated clearly that 'the price and the launch date will be announced at a later date' and 'the Marq is expected to set a benchmark in the high-end luxury residential market'. The price of $2,800 per square foot and upwards is what property consultants - not SC Global - believe The Marq would fetch. (Please see The Straits Times article on of Jan 18, 2007, quoting Ku Swee Yang, director of marketing and business development at Savills Singapore).

    Second, SC Global's share price rose approximately 31 per cent, from a closing price of $3.12 on Jan 17, 2007 (before our press release that day and The Straits Times article on Jan 18) to $4.10 on Jan 26. SC Global's share price rose only 9 per cent, from a closing price of $3.90 on Jan 19, 2007 to $4.26 on Jan 22 (the day of a Bloomberg interview, referred to in BT's article as the media interview in which SC Global said it planned to price the project 'north of $3,000 psf'). In fact, SC Global's share price fell approximately 4 per cent to close at $4.10 on Jan 26, 2007, from $4.26.

    Therefore, any suggestion that SC Global released its selling price for The Marq to increase its own share price is totally unwarranted and strongly refuted by us.

    In addition, statements in the BT article discussed SGX disclosure rules on material information and how they would apply to property developers. The references in the article to SC Global - and to SC Global only in this context - were wholly inappropriate as they conveyed the wrong impression to BT's readers that SC Global is in breach of the relevant SGX listing rules.

    Simon Cheong
    Chairman & chief executive officer
    SC Global Developments Ltd

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