Report from AmFraser Research this morning.
https://www.amfraser.com.sg/gcsg/downloa...121206.pdf
SC GLOBAL: PRIVATIZATION OFFER AT S$1.80
PrivaƟzaƟon offer at S$1.80, ~50% premium to last close. Mr. Simon
Cheong, current Chairman and CEO of SC Global, made an
uncondiƟonal cash offer for SC Global at S$1.80 per share, which is
at 49.4% premium to last close of S$1.205 on 30 Nov 2012. The offer
price is also 15.4% above the unaudited net asset value as at end Sep
2012. Mr. Cheong already owns 55.06% of SC Global. We view this
management buyout exercise as a strong sign of confidence in SC
Global’s prospects.
PrivaƟzaƟon offer is Ɵmely; SC Global lacks catalysts to unlock
share value otherwise. Sales have been moving slow, and inventory
hangovers of its high‐end properƟes is a key concern at SC Global.
Projects such as Hilltops in Cairnhill Circle and The Marq on Peterson
Hill have clocked low take‐up rates of only 18.7% and 50.0% as at
end of Oct 2012, despite having been completed for more than a
year. The slow moving sales have been weighing down on net cash
flows, which were negaƟve for the year so far.
Accept—offer price of S$1.80 is close to our FV of S$1.98. We value
SC Global at RNAV, which we esƟmate to be S$1.98. Even though the
offer price is 9% lower than our FV, the offer sƟll presents a rare
opportunity to unlock value for current shareholders. Considering
the very low likelihood of potenƟal counterbids, we advocate that
shareholders take up the offer and realize the value on their SC
Global investment.
The following is another informative report from L&T.
SC GLOBAL
S$1.205-SCGD.SI
Founder Simon Cheong (SC) is “generous”,
launching a voluntary unconditional offer at
$1.80 a share to privatize his namesake company,
which was previously known as ANA Hotels with
DBS Land (before being renamed CapitaLand) and
Kua Peck Long as controlling shareholders. SC
bought into it in 1999. (SC last bought almost 5 mln
shares in September at $1.05 each.)
The offer is:
i. 49% above the last traded price;
ii. double the low of after the loss warning relating
to AV Jennings in July;
iii. 15% above Sept ’12 NAV of $1.56 a share.
We believe the move may have been necessitated by
the following factors:
a. several of SC Global’s long completed
projects - the Marq, Hilltops, 7 Palms, have
simply stalled. SC Global is sitting on $2
bln worth of inventory! 10% penalty = $200
mln; 48% (if not sold 3 years after TOP =
almost $1 bln!
b. no signs the government would lift the rule
that all residential projects have to be sold
2 years after obtaining TOP, and all
completed units have to be sold and cannot
be rented out.
It is not clear what is Wheelock’s stance regarding
its 15% stake (65.5 mln shares),
the bulk of which
was bought at no lower than $2.30 a share (albeit
not adjusted for rights issue). The lowest of 48.5 cents
was in respect of 7.35 mln shares bought in during the
Financial Crisis in Oct ’08.
SC does not intend to maintain listing status of the
company, ie it will exercise right to compulsory
acquisition of remaining shares once he crosses 90%.
With SC owning 227.75 mln shares or 55.06% of the
company’s issued cap of 413,637,481 shares, the
exercise will cost SC $334.6 mln.
We do not believe there are other property
companies in the same boat as SC Global in
terms of unsold homes.
Shareholders who accept the offer will be paid within
10 days of acceptance. There is urgency to do so just
yet.