Privatisation theme

Privatisation theme: With developers trading at historically steep discounts, and further expected weakness for high-end residential properties CIMB sees more reasons for privatizations of small-mid cap developers. Including the most recent general offer of SingLand, CIMB counts nine privatisations/partial offers within the property space in the past four years, with offer prices offering >20% upside on average. In ascending order, CIMB believes Wheelock, Ho Bee, Wingtai and Bukit Sembawang could be next in line, each for different reasons - cheap valuation, presence of a major shareholder, low liquidity, limited need for equity raising and the catalyst of extension charge. Singapore developers are currently trading at an average FY14 P/BV of 0.75x and 34% discount to CIMB’s RNAV estimates - cheap in the house’s view.