Brief Singapore: Golden Land: Less An Offer, More A Consolidation Of Interests and more

In this briefing:

1. Golden Land: Less An Offer, More A Consolidation Of Interests
2. Continuing Positive Outlook for Last Mile Industrial Real Estate Supports New Financings Globally
3. Ho Bee Land – 4Q Earnings Hit by Unexpected Tax Provision
4. The Week that Was in ASEAN@Smartkarma – Indonesian Property, XL Axiata, and Singapore’s Economy

1. Golden Land: Less An Offer, More A Consolidation Of Interests

Frasers Property (Thailand) Pcl (FPT TB) has announced a conditional voluntary tender offer for Golden Land Prop Dvlp (GOLD TB) at Bt8.50/share, ~2.4% premium to last close.

Frasers Property Ltd (FPL SP) owns 40.95% in FPT and also 39.92% in GOLD. FPT’s director Panote Sirivadhanabhakdi (the son of Charoen Sirivadhanabhakdi), via his majority-controlled vehicle Univentures Public (UV TB), holds 39.28% in GOLD. Panote is also the vice-chairman of GOLD.

Presumably, both FPL and Univentures will tender into the Offer giving FPT a minimum holding of 80.2%. There were no specific minimum acceptance conditions attached to the tender offer mentioned in the announcement.

Should FPP secure 90% of GOLD in the tender offer, it may proceed with its delisting. A voluntary delisting is still achievable with ~80% in the bag, but that is conditional on <10% of shareholders not voting against.

Preconditions to the commencement of the tender offer include the approval from disinterested shareholders in FPP, approval from “relevant contractual parties of GOLD and GOLD’s subsidiaries” and the approval from the Office of Trade Competition Commission.

The fact the Sirivadhanabhakdi family already holds, directly/indirectly ~80% in GOLD, such regulatory approvals should be forthcoming.

This appears a done deal. The only apparent risk is the expected shareholder vote of Univentures wherein Panote will likely need to abstain.

Currently trading at a gross/annualized spread of 1.8%/4.3% assuming early August payment. Very tight, suggesting investors are more likely angling for the back-end.

2. Continuing Positive Outlook for Last Mile Industrial Real Estate Supports New Financings Globally

• We published a series of Insights explaining our positive outlook for the industrial segment of the global Real Estate sector.
• Currently, companies in this segment are capitalizing on strong fundamentals to raise new equity capital. They are using the proceeds from these deals to fund property acquisitions and developments, and to deleverage their balance sheets, thereby setting the stage for continuing growth.
• This trend is especially notable because it is taking place in a range of geographic locations, around the world.

3. Ho Bee Land – 4Q Earnings Hit by Unexpected Tax Provision

Ho Bee Land Ltd (HOBEE SP) (“HBL”) reported it 4Q 2018 financial results this evening.

PATMI for 4Q18 dropped 20.5% YoY to S$81.4 mil. Excluding the impact of the tax provision for Hotel Windsor, underlying PATMI would have remained stable at approximately S$101.7 mil.

HBL’s real estate business had performed within expectations. There were also improvements in the financial position of HBL, such as the increase in cash balance, lower net gearing ratio, refinancing of bridging loan and extension of debt maturity.

Fair value of HBL is pegged at S$3.32 per share, translating to an upside of 32%. REIT listing remains a potential catalyst. I maintain my BUY rating on HBL.

4. The Week that Was in ASEAN@Smartkarma – Indonesian Property, XL Axiata, and Singapore’s Economy

Macro Insights

In Mildly Expansionary, but Socially Magnanimous While Staying Focused on Long-Term Competitiveness, CrossASEAN Economist Prasenjit K. Basu zooms in on the Singapore economy and despite expectations of slower growth this year, sees ample room for fiscal stimulus should the global economy weaken further.

In US Dollar Demand – Fading Appetite, Dr. Jim Walker discusses the less than voracious appetite for the US Dollar.

In Prabowo Errs Again; Widodo Lead Intact; Riady’s Mei-Egg-Karta; BI Holds; Repsol’s Find; Debate Text, Kevin O’Rourke provides his value-added commentary on political and economic developments in Indonesia over the past week. 

In Philippines: Institutional Reforms that Promote Macro Stability, Phipillines economist Jun Trinidad zeros in on institutional reforms which he sees are providing a stable platform for growth. 

Equity Bottom-Up Insights

In XL Axiata Results Show a Strong Turnaround Underway in Indonesia, our friends at New Street Research revisit Xl Axiata (EXCL IJ) post its most recent results and see the potential for a strong data-driven turnaround over the coming few quarters. 

In Singtel’s Weak 3Q18 Results but Dividend Looks Sustainable and Long Term Upside from Associates, New Street Research circle back to Singtel (ST SP) post results and remains constructive on the stock. 

In M1 Offer Unconditional as Axiata Tenders, Events Specialist Travis Lundy revisits the ongoing M1 Ltd (M1 SP) deal which seems to have reached a conclusion following Axiata Group (AXIATA MK) ‘s acceptance. 

In Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations, Arun George takes a look at the company following an article in the local press casting dispersions on its China sales. 

In Delta Thailand’s Tender Offer: Updated Timetable, David Blennerhassett circles back to the ongoing tender offer for Delta Electronics Thai (DELTA TB). 

In Sing Holdings – Surge in Full-Year Earnings with a Surprise Hike in Dividend. 67% Upside. BUY., Royston Foo comments on the company following a strong set of results. 

In MAJOR: Impressive 4Q18 Earnings, our friends at Country Group comment on Major Cineplex Group (MAJOR TB) following stellar numbers. MAJOR’s 4Q18 net profit was Bt259m (+247%YoY, +26%QoQ). 

Sector and Thematic Insights

In this week’s REIT Discover: The Three R’s Driving Starhill Global REIT (SGREIT SP), Anni Kum zeros in on Starhill Global Reit (SGREIT SP) and finds an interesting story.