Sound Global

Sound Global: Group announced the possibility of a delisting from SGX at a minimum $0.70 per share. The exit offer is subjected the approval from all relevant authorities. Currently, the executive director and chairman Wen Yibo holds an effective stake of 56.2%. Stanchart views the potential delisting as expected by the market, given the weak liquidity and low sentiment regarding water stocks in Singapore, especially after some fraud incidents among some peers. Given that a minimum of 25% of free float is required by the SEHK, we do not rule out the possibility of SGL placing its shares on the SEHK as primary listing, if it cannot maintain the 25% free float after the exit offer, as required by the SEHK listing rule. Sound Global currently trades at an undemanding 7x 2014 PER relative to EPC peers. Its expansion into the BOT segment could provide a re-rating opportunity in the long term. Stanchart reiterate its OUTPERFORM with TP of $0.86.