Jun 4, 2011

SC Global CEO buys 2.26m of firm's shares

Move brings his stake to 53.9%, fuelling analysts' speculation of delisting

By Cheryl Lim

SC Global chief executive Simon Cheong's raising of his company stake may signal his confidence in the luxury home market rather than a move towards delisting of the firm. -- PHOTO: SC GLOBAL

CHAIRMAN and chief executive of luxury home developer SC Global Developments Simon Cheong has acquired nearly 2.26 million of his company's shares for about $3 million in the past few days.

This has fuelled speculation among analysts, who had identified the company as one that might be delisted from the Singapore Exchange and taken private.

On Wednesday, Mr Cheong purchased 1.565 million shares at an average price of $1.35 per share, raising his deemed stake from 53.2 per cent to 53.6 per cent. The news drove the company's share price nearly 6 per cent higher. Its shares rose eight cents yesterday, closing at $1.46.

Mr Cheong had bought the shares in the open market on Wednesday, through a holding company called Edenlia.

Yesterday, after the market closed, it was announced that Mr Cheong had bought a further 693,000 shares on Thursday at an average price of $1.377, raising his deemed stake to 53.75 per cent. He has a direct stake of 0.16 per cent, or a total of 53.9 per cent.

According to a Kim Eng research note released yesterday, this amount is 10 times more than the company's own share buyback in the past two weeks.

The proposed privatisation of Allgreen Properties announced last week, coupled with a spate of privatisation offers by listed property companies, has put the spotlight on which counters could be next.

Experts say attractively modest valuations and low borrowing costs may prompt more companies to consider privatisation. SC Global has been thrown up as a possible candidate for privatisation, among other property counters such as Wing Tai Holdings, GuocoLand, Ho Bee and Hiap Hoe.

But DMG & Partners Securities co- head of research Terence Wong said Mr Cheong's move may not necessarily be a clear sign that the company is moving towards a delisting. 'Insiders are always buying or stepping up on their stock... Some companies have earmarked certain periods where key shareholders are allowed to buy and sell stock, so we may be seeing an instance of that happening.'

Kim Eng Research said the luxury property segment has had a subdued performance in the past year, but Mr Cheong's move could be a signal of his confidence in the luxury home market.

Said Kim Eng analyst Ooi Yi Tung: 'This might also be a sign that perhaps he is seeing more sales coming in... but it could also be seen as an indication that the stock is undervalued.'

Kim Eng's note said SC Global was trading at a very steep 71 per cent discount to its revalued net asset value, which is a measure of what the company is worth if it is sold.

Market watchers say there are signs that the luxury home market is poised for a rebound. A few weeks ago, a unit at SC Global's The Marq was sold at $5,842 per sq ft, the highest-ever recorded price for a residential unit in Singapore.

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