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4 Stocks This Week

4 stocks this week [27 Mar 2017]: Top Global; RHT Health Trust; SGX; Tee International

This week’s column features companies that may be seeking to delist or with potential transactions that will affect their listing statuses.

 

In this week’s edition of our 4 Stocks This Week column, we focus on listed companies that have either sought delisting or may be seeking transactions that could lead to a delisting.

Before going into the article, we always ask our readers, especially for this column, to share their thoughts, opinions or questions on listed companies in Singapore that are interesting to them. Do let us know why you think they are interesting via our Facebook page or email.

Market Sentiments

We start this column by first looking at how the global economy has performed in the past week. This provides a good comparison for the Singapore market later in the article.

The Morgan Stanley Capital International (MSCI) All Country World Index (AWCI) improved this week, falling just shy of its record high levels reached in mid-March. On Monday (27 March 2017), it stood at 447.40 and rose to a high of 451.14 by mid-week before settling marginally higher for the week at 448.17 on Friday (31 March 2017).

Over in Singapore, the Straits Times Index (STI) increased over 1.5% this week, from 3126.88 on Monday (27 March 2017) to 3175.11 on Friday (31 March 2017). During the week, it also rose to its highest level since August 2015. For the year to date, the STI has risen over 10.2%, and in the last 52 weeks, it has improved 17.3%.

Top Global Limited

Top Global, a real estate developer in Singapore, announced plans to delist from SGX on Tuesday (28 March 2017). The main reason for this move was to avoid having to pay Qualifying Certificate (QC) penalties that will be levied by the government for the unsold homes.

By choosing not to sell the homes, at losses due to the soft property market, it has to pay the QC. By delisting and selling the homes to its own subsidiaries, it will avoid the penalties. However, it will still be liable for the Seller’s Stamp Duty (SSD) if it sells the properties within the next three years.

Also Read: Why You Should Not Rush In To Buy Private Properties Now, Despite The Removal Of Some Cooling Measures

On Tuesday (28 March 2017), its executive chairman, Oei Siu Hoa, sister of property magnate, Oei Hong Leong, launched a cash offer of $0.33 a share to buy out minority shareholders. This represented a 50% premium on its last traded share price, after calling for a trading halt on Monday (27 March 2017), of $0.22 on Friday (31 March 2017).

Since the start of the year, Top Global has returned 75.5%. Looking at the share price chart in the last 1 week, it has not made any significant moves other than settling at the offer price.

 Top Global share price chart (1-week)

Source: Yahoo! Finance/ Google Finance

RHT Health Trust

RHT is a business trust with Indian healthcare properties across 13 states in its portfolio. Its sponsor, Fortis Healthcare, is one of the largest healthcare chains in India.

On Monday (27 March 2017), RHT received a query from SGX regarding its share price activity. This was due to the fact that its share price had opened close to 5.8% up, at $0.915, after closing at $0.865 on Friday (24 March 2017). Together with this, Bloomberg ran an article, on Sunday (26 March 2017), stating that Fortis may be considering buying out RHT.

In its reply to SGX, the company said that its sponsor, Fortis, claims that the report on Bloomberg was speculative and does not respond to such material. It goes on to mention that apart from fund raising activities undertaken by Fortis, it is not aware of any other undisclosed information that may explain the volatile trading activity.

Also Read: How REITs In Singapore Performed In 2016

This was also the second time that SGX has queried RHT on its share price movement this year. In February, it had also queried the company after fluctuations in its share price saw it losing as much as 17.9% and then gaining as much as 6.9% the next day. [See 3-month chart]

On a weekly basis, RHT has lost about 1.1%. Since the start of the year, it has lost 2.7%. Looking further back, on a 52-week basis, it has actually performed well, gaining close to 28.7% in value.

 RHT Health Trust share price chart (1-week)

RHT Health Trust share price chart (3-month)

Source: Yahoo! Finance/ Google Finance

Singapore Exchange Limited

On Friday (31 March 2017), the Business Times ran an article discussing strategic investments and mergers regarding SGX. This was played down by market observers as its past efforts to buy the Australian Exchange (ASX) was scuppered in 2010 and more recently the proposed merger of stock exchanges in Germany and London due to political reasons which will remain the main hurdle to such exercises even today.

Another Bloomberg article was the reason for this, suggesting SGX was mulling tie-up deals from partnerships, stake sales and mergers, including with Nasdaq and CME Group.

Nasdaq owns the second largest stock exchange in the world as well as several other stock market network and other US stock and option exchanges, including Nasdaq Nordic and the Nasdaq Baltic.

Also Read: 4 Stocks This Week [16 Jan 2017]: Capitaland Mall Trust, Dasin Retail Trust, Civmec & SGX

CME Group operates the world’s largest options and futures market as well as large derivatives and futures exchange in Chicago, New York City. It also owns the Dow Jones stock and financial indexes, and several exchange and clearing facilities across several cities globally.

The need for SGX to remain relevant and continue strengthening its services is not surprising, especially with Asian peers Hong Kong and China at an advantage by being able to merge certain functions of its stock exchanges.

In the past week alone, SGX has gained 1.9%, rising from $7.56 on Monday (27 March 2017) to $7.70 on Friday (31 March 2017). Since the start of the year, the it has gained 7.5% and, in the past 52 weeks, it has returned 2.9%.

SGX share price chart (1-week)

Source: Yahoo! Finance/ Google Finance

Tee International Ltd

Tee International, an engineering services firm, is another company to join the growing list of exodus from the Singapore bourse. Its CEO and controlling shareholder, Phua Chian Kin, is finalising a proposal that may lead to a privatisation and delisting of the company.

On Monday (27 March 2017), the company halted trading of its shares and extended this for the entire week.

Its latest set of results, announced in January 2017, showed a 5.7% increase in its 1H2016 revenue to $128.7 million from $121.8 million in 1H2015. Its profit, however, was down over 70.4% due to recognising a sale in its subsidiary in the preceding period as well as higher finance cost.

As at its last closing price, Tee International is valued quite heftily at 0.96x price-to-book value and 25.5x trailing price-to-equity.

4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions. 

Read Also: 4 Stocks This Week [13 Mar 17] Ezra; Kimly; QT Vascular; Wee Hur

 

 

 

4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.

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