Privitization

Privitization: Following Keppel Corp’s recent move to privatize Keppel Land, RHB has highlighted a list of potential privatization candidates going forward.

The candidates are as per follows:
1) UIC - The broker highlighted a high likelihood for the privatization of UIC, guiding that major shareholder UOL has been slowly tightening its grip on the counter, and now holds a 44% stake. Separately, Haw Par Corporation holds a 5% stake in UIC. The three companies are all affiliated to Singapore banking tycoon, Wee Cho Yaw, who has over the past few years privatized some of his listed entities in a bid to unlock value and streamline its shareholdings. UIC currently trades at 0.84x P/B.

2) Great Eastern - OCBC has over the past decade made two attempts to privatize its insurance franchise unsuccessfully. Despite a run-up in share price over the past year, Valuations still remains attractive at 1.1x P/EV. The house is pegging a 1.3x P/EV to derive the group’s fair value.

3) Wheelock Properties - The group has been caught off-foot on several occasions in recent years, resulting in write-downs for a site in Fuyang, China and its Scotts Square retail mall in Singapore. Its Hong Kong parent Wheelock & Company, which owns a 76% stake in the group could look to privatize the entity and redeploy excess cash to fund its growing Chinese operations. Wheelock Properties currently trades at 0.73x P/B.

4) Wing Tai – The potential of incurring the Qualifying Certificate(QC) penalties on its luxury unsold properties makes the group a suitable candidate for privatization. With a net gearing 0.11x, Wing Tai has one of the lowest leverage among Singapore developers. This gives it ammunition to replenish its land bank, as land prices continue to drift lower. Wing Tai currently trades at 0.53x P/B.

5) Ho Bee – The group has a steady stream of recurring income, given its investment properties in Singapore and London. With a low free float of 21%, some market watchers believe that a privatisation cannot be ruled out. The stock offers a low-risk exposure to the high end market, as its Sentosa inventories are not subjected to QC penalties. Ho Bee currently trades at 0.57x P/B.

6) Hong Fok – Asset enhancement works at its two prime commercial properties have driven up the group’s asset value, with the stock now trading at a 60% discount to its NAV. The group recently unveiled its maiden cash dividend and is committed to continue this trend. Hong Fok currently trades at 0.57x P/B.