IFA's holding company discounts in offer based on study of 11 SGX-listed mid to large-cap conglomerates: Sinarmas Land
The company, after consulting the adviser W Capital Markets, said that the IFA had deemed the holding company discount applied to its unlisted assets to be within 'a reasonable range to adopt'.
In its assessment of Lyon Investments' initial offer price of S$0.31 a share, W Capital Markets had noted that the offer was not fair but reasonable, based on its valuation of S$0.35 to S$0.361 per share. This valuation had applied a 20 to 22 per cent holding company discount to the company's unlisted assets.
The market regulator on May 9 posed queries to the company on the IFA's decision to apply the holding company discount. While the regulator said that it had noted the adviser's rationale, it remained unclear how the figure of 20 to 22 per cent had been derived.
In its response, Sinarmas Land said that the IFA's application of the discount was based on past cases of 11 SGX-listed mid to large-cap conglomerates, including other holding companies in the property sector.
Comparing their closing share prices to target prices by research analysts based on sum-of-the-parts (SOTP) analysis, the IFA found that a median discount of 24 per cent and mean of 19.5 per cent were observed. When applied to conglomerates in the property sector, these figures were 24.1 per cent and 24 per cent, respectively. The IFA had therefore deemed the range of 20 to 22 per cent reasonable, Sinarmas Land said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
The IFA had previously explained that holding company discounts are commonly applied to reflect the market perception of risks involved in owning a holding company. Corporate expenses, tax implications from dividends and investors' limited control over subsidiaries could also be the basis for such discounts, the IFA had said in response to criticisms.
This claim was questioned by the regulator, who requested that the adviser provide examples to show that the application of such discounts by IFAs is a 'commonly accepted practice'.
In response, the IFA noted that SOTP analyses in the voluntary delisting of Golden Energy and Resources in May 2023, and a scheme of arrangement of Japfa in March 2025 had both applied similar discounts, ranging from 10 to 25 per cent in the former, and 20 to 23 per cent in the latter.
W Capital Markets also pointed to IFA statements in deals involving WBL Corporation, Keppel Telecommunications & Transportation and Singapore Press Holdings, all of which highlighted a sound basis for applying SOTP discounts to conglomerates.
On Saturday, Sinarmas Land announced that the offeror had raised the offer price to S$0.375 a share. The revised offer price represents an increase of 21 per cent or S$0.065 over the initial offer price, and is higher than the highest closing price of the company's shares for more than six years.
Shares of Sinarmas Land were trading 1.3 per cent or S$0.005 lower at S$0.375 as at 10.47 am on Wednesday.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
18 hours ago
- Business Times
Europe: Shares log biggest daily drop since April after US tariffs hike
[BENGALURU] European stocks logged their biggest one-day drop in over three months on Friday (Aug 1), at the end of a busy week as investors grappled with the repercussions of fresh US levies on dozens of countries, including a 39 per cent tariff on Switzerland. Investors shunned riskier equities globally as Trump continued his tariff blitz, announcing steep levies on exports from dozens of trading partners including Canada, Brazil, India and Taiwan with countries not listed subject to a base 10 per cent rate ahead of a Friday trade deal deadline. Healthcare stocks lost 1 per cent after US President Donald Trump sent letters to the leaders of 17 major pharmaceutical companies, including Novo Nordisk and Sanofi, outlining how they should slash US prescription drug prices. The sector was already singed this week by Novo Nordisk's profit warning. The Denmark-listed Wegovy-maker shed 1.8 per cent and logged its steepest weekly decline on record. 'We saw during the week that companies such as Novo Nordisk had different issues. European pharma is very close to bottoming and that's why it didn't react to the uncertainty around tariffs and policy,' Anthi Tsouvali, a multi-asset strategist at UBS Global Wealth Management said. 'Europe is an export market... if we see heightened tariffs all over the world and trade being subdued, then that will have an impact on European companies regardless.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The pan-European Stoxx 600 index slid 1.9 per cent and marked its biggest one-week drop since early April when Trump unveiled his tariffs on world economies. The euro Stoxx volatility index jumped 4.25 points to its highest in over one-month. The Stoxx index has lost over 5 per cent from its March peak, after coming within 2 per cent of that level earlier this week, dragged down by a record plunge in Novo Nordisk shares, and as investors assess the implications of the U.S.-EU trade deal. Markets in Switzerland were shut for a holiday, but UK-listed Watches of Switzerland declined 6.8 per cent, while a U.S.-listed exchange traded fund tracking the country's equities slid to a more than three-month low and was last down 1.2 per cent. Most regional bourses were in the red, with Germany's blue-chip DAX down 2.7 per cent, while Denmark's OMXC fell 1.8 per cent to a nearly two-year low. Banks, that had rallied earlier in the week, were down 3.4 per cent and were the top sectoral underperformer as they notched their biggest one-day drop since early April. Adding to the dour mood, US data showed job growth slowed sharply in July, which boosted bets for an interest rate cut by the Federal Reserve next month, while traders also priced in a dovish move by the European Central Bank later this year. In a bright spot, Italy's Campari was the top gainer on the Stoxx 600 index, adding 7.9 per cent after reporting an increase in second-quarter operating profit. REUTERS
Business Times
a day ago
- Business Times
Automotive distributor Cycle & Carriage suffers customer data breach
[SINGAPORE] The personal information of a number of customers of automotive distributor Cycle & Carriage Singapore (C&C) has been leaked in a data breach. Based on an e-mail seen by The Business Times and sent to the company's customers on Thursday (Jul 31), an unknown threat actor gained access to C&C's customer relationship management system on Jul 14. This actor downloaded some customers' information, which may have included their name, e-mail address, mailing address and phone number. However, banking and credit card information were not contained in the data that was accessed. The e-mail did not elaborate on how many individuals were affected. C&C is conducting an investigation and has lodged a police report. It has also alerted the Personal Data Protection Commission, as well as the customers whose data may have been compromised. It also urged its customers to remain vigilant of phishing or suspicious requests. BT has contacted C&C for further details, including the number of customers involved and whether the breach is limited to clients in Singapore. In the city-state, C&C is the agent for a number of automotive brands, including Mercedes-Benz, Kia, Citroen, Smart, Gogoro and Maxus. It is part of Singapore Exchange-listed Jardine Cycle & Carriage, which has a major automotive presence in the region, including Malaysia, Indonesia and Vietnam.
Business Times
2 days ago
- Business Times
3HA Capital to privatise watch-listed CosmoSteel after buyout offer accepted
[SINGAPORE] Watch-listed company CosmoSteel Holdings will be delisted from the Singapore Exchange (SGX) as it no longer satisfies the bourse's free-float requirement. This comes as an offer by investment holding company 3HA Capital to privatise the group has received valid acceptances in respect of some 236.1 million shares, representing some 90.3 per cent of the piping-systems provider's total shares. As at 6 pm on Thursday (Jul 31), 3HA Capital and its concert parties owned, controlled or had agreed to acquire around 237.1 million shares, representing 90.7 per cent of CosmoSteel's total issued shares. This left under 10 per cent of shares that were publicly held. 3HA Capital said on Thursday that it intends to compulsorily acquire all the offer shares it does not yet own and proceed to delist CosmoSteel from SGX. The offer closes at 5.30 pm on Friday. Chance for shareholders unwilling to bear risks On May 15, 3HA Capital made a voluntary conditional cash offer for all CosmoSteel shares at a price of S$0.20 a share. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 3HA Capital is a special-purpose vehicle whose shareholders include Hanwa Singapore, a wholly owned unit of Tokyo-listed Hanwa Co, which in turn is a controlling shareholder of CosmoSteel. Hanwa Co owned some 82.6 million shares of CosmoSteel or around 31.6 per cent of its entire paid-up issued capital, as at May 15. The offeror noted that the piping-systems provider, on the SGX watch list since June 2018, had faced potential suspension from trading if it failed to meet the watch-list exit criteria by the extended Jun 4 deadline. 3HA Capital said that the offer was an opportunity for shareholders 'who are not prepared to bear the risks associated with the company' to realise their investments at a premium to historically traded prices. It added that the offer price was a premium of 48.1 per cent over the counter's last-traded price of S$0.135 on May 14. On Jun 23, the offeror revised its offer price upwards to S$0.25 a share after an independent financial adviser deemed its initial offer unfair. The revised offer turned unconditional in all respects on Jul 7, after it received valid acceptances representing around 50.2 per cent of all CosmoSteel shares. The counter closed unchanged at S$0.25 on Thursday.
