Ho Bee Land (S$2.02): Chairman and CEO Chua Thian Poh purchased a total of 1.4m shares at average price of $2.016 per share on 3-13 Mar, post 5¢ final dividend, prompting speculation of potential corporate action.
Ho Bee is now 73% controlled by Chua and viewed as an easy privitisation target as this only 17% short of the 90% level that will trigger delisting of the stock.
We wish to highlight, however, that Chua has a history of reinvesting part of his dividends back into the stock.
For instance, Chua bought 1.1m shares between 20 Mar and 4 Apr ‘14 after the final and special dividend of 8¢ was declared. He again accumulated 1.06m shares on 19 May-1 Jul following the payment of dividends.
Based on the total dividends of 8¢/share paid out in 2014, Chua reinvested ~12% of his dividend proceeds back into Ho Bee.
As his 2015 reinvestment amounts to 11.53% of dividends declared, it is premature to raise the privitisation alarm.
Nonetheless, we do not discredit the incentive for Chua to take the property group private for the following reasons:
1) steep 48% discount to book value
2) low free float, making it easier to achieve the 90% delisting hurdle
3) unsold Sentosa Cove units at risk of being penalized by qualifying certificate rules for listed developers with foreign shareholders
Meanwhile, the street is unanimously bullish on the counter with 4 Buy ratings and consensus TP of $2.55
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