CDL pops after selling South Beach stake to Malaysians; SIA Engineering hits five-year high

Straits Times

2 days ago

CDL's share price rose 8.5 per cent over the week to close at $5.25 on June 6. PHOTO: ST FILE
SINGAPORE – City Developments Limited (CDL) popped last week, after it announced it will sell its 50.1 per cent stake in the South Beach mixed project to its Malaysian partner's IOI Properties Group for about $834.2 million.
The transaction is expected to result in a gain on disposal of about $465 million for the financial year ending Dec 31, 2025, which will be used to reduce bank borrowings and lower its debt, CDL said on June 4.
The company had said in 2024 that it aimed to divest $1 billion in assets, and has announced about $600 million in divestments so far.
CDL's share price, which had declined following a public dispute between executive chairman Kwek Leng Beng and his son, chief executive Sherman Kwek, over control of the company's board, rose 8.5 per cent over the week to close at $5.25 on June 6.
SIA Engineering hit a five-year high of $2.98 on June 6, outperforming its average target price of $2.71 as investors ploughed into the stock.
The aircraft maintenance provider has been a favourite stock pick among analysts, who have begun identifying companies that could benefit from an expected capital infusion into local stocks before the end of the year.
As part of an effort to revive the stock market, the Monetary Authority of Singapore will be allocating $5 billion in seed capital to Singapore-based funds for investing in local stocks, and expects to shortlist suitable investment strategies by end-September.
Analysts reckon the funds will likely be deployed before the end of 2025.
SIA Engineering rose 8.5 per cent through to the week, and closed on June 6 at $2.94.
Great Eastern to address share trading suspension
Great Eastern Holdings on June 6 finally announced that minority shareholders will be able to vote on the delisting of the insurance company or a resumption of trading, nine months after its shares were suspended from trading on the Singapore Exchange (SGX) due to an insufficient public float of less than 10 per cent.
If shareholders vote in favour of delisting, major shareholder OCBC Bank will make a final exit offer of $30.15 per share, valuing the remaining 6.28 per cent it does not own at $900 million.
This revised offer represents a 17.8 per cent premium over OCBC's initial offer of $25.60 per share in May 2024. Independent financial adviser (IFA) Ernst & Young has assessed the new offer as fair and reasonable, after previously finding the earlier offer unfair but reasonable.
The delisting decision will be made solely by minority shareholders, as OCBC – which already owns 93.72 per cent – will abstain from voting.
The proposal requires at least 75 per cent approval at the upcoming extraordinary general meeting.
Of the 6.28 per cent of shares that OCBC currently does not own, two prominent shareholder families – the Lees and the Wongs – own a combined 3 per cent.
In January, it was reported that OCBC CEO Helen Wong had met them to persuade them to accept the earlier offer, though those efforts were reportedly unsuccessful.
The Lee family, which has ties to OCBC's founding, is expected by some to support the delisting. However, if the Wongs choose not to vote in favour, the resolution would require unanimous support from the Lees and the rest of the minority shareholders to pass.
If the delisting vote fails, shareholders will then vote on whether to resume trading of Great Eastern's shares. This resolution also requires 75 per cent approval. OCBC will be able to vote on this resolution.
Under the trading resumption plan, Great Eastern will carry out a one-for-one bonus issue, giving shareholders a choice of receiving either regular voting shares or Class C non-voting shares.
OCBC has indicated that if the delisting does not go through, it will vote in favour of the trading resumption and choose to receive Class C shares, at Great Eastern's request. This move would reduce OCBC's voting stake from 93.72 per cent to 88.19 per cent, restoring the minimum public float required for trading to resume.
OCBC has also stated that if the delisting fails and trading resumes, it has no intention of making another offer for the remaining shares.
Some analysts view the revised offer positively, noting that it is now considered fair, is in line with peer valuation multiples and offers a 17.8 per cent premium over the earlier bid.
However, they also caution that if trading resumes, liquidity in Great Eastern shares is likely to be limited due to OCBC's more concentrated shareholding in the company.
Other market movers
Units of Keppel DC Real Estate Investment Trust (Reit) rose 2.3 per cent to $2.24 on June 6, after it was announced that the Reit will replace Hong Kong-based conglomerate Jardine Cycle & Carriage on the Straits Times Index (STI), following a quarterly review.
The move, which will take effect on June 23, increases the total number of Singapore Reits on the index to eight, and is expected to increase their combined weight in the index to more than 10 per cent.
Internet service provider NetLink NBN Trust will replace Keppel DC Reit on the STI's reserve list. The other four companies on the reserve list are CapitaLand Ascott Trust, ComfortDelGro, Keppel Reit and Suntec Reit.
Oiltek International, a provider of vegetable oil processing technology, jumped by more than 9 per cent to 60.5 cents on June 6, when it successfully transferred its listing from the Catalist to the SGX mainboard.
The company first listed in March 2022 at 23 cents per share.
CEO Henry Yong said the move will enable Oiltek to gain greater visibility, liquidity and access to capital.
Oiltek International jumped by more than 9 per cent to 61 cents on June 6, when it successfully transferred its listing from Catalist to the SGX mainboard.
PHOTO: OILTEK
Ms Lee Khai Yinn, a partner at SAC Capital, which was Oiltek's former sponsor, said the company's move to the mainboard is an example of how the Catalist can serve as a platform for emerging firms to scale and succeed.
Shares of Singapore Paincare Holdings rallied last week after the Securities Investors Association (Singapore), or Sias, noted that a privatisation offer of 16 cents on May 27 undervalues the stock.
Sias noted that Singapore Paincare was listed at 22 cents per share at a premium to its unaudited net asset value per share in July 2020 during Covid-19, when valuations were depressed and the STI was trading at around 2,500.
It pointed out that the company should now be valued at a similar premium, at around 36 cents to 37 cents, given that the STI is trading at around 3,900, and 'well-managed healthcare companies generally trade at premiums to their net asset value'.
In any case, minority shareholders of Singapore Paincare should wait for a report to be released by an appointed IFA before selling their shares on the open market, said Sias.
Shareholders who do sell on the open market will not have recourse if the privatisation offer price is subsequently revised upwards, Sias added.
It also reminded shareholders that 'for a delisting to take place, the IFA has to conclude that the offer is both fair and reasonable'.
The Catalist-listed counter closed on June 6 at 17.4 cents, up 11.5 per cent through the week.
What to look out for this week
All eyes will be on US consumer price index data for the month of May, which will be released on June 11.
US consumers probably saw slightly faster inflation in May, notably for merchandise, as companies gradually pass along higher import duties, Bloomberg quoted analysts as saying.
Despite US President Donald Trump's efforts to pressure the Federal Reserve into quickly lowering interest rates, Fed chairman Jerome Powell has indicated they have time to assess the impact of trade policy on the economy, inflation and jobs market.
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