Wheelock Properties bought 10% stake in SC Global. On 22 June, Wheelock Properties (Singapore) Ltd announced that it has acquired 18,682,000 ordinary shares in SC Global from Simon Cheong, the Chairman and CEO of SC Global. This represents a 10% interest in the Company. The shares were transacted at S$6.00 per share, which works out to a total consideration of S$112.1 million. Wheelock’s acquisition is intended to be for long-term investment in a well managed and respected Singapore property company.
Valuations look very attractive. SC Global has one of the highest historical P/Es among the Singapore-listed developers, which is approximately 71.2x (FY06). However, a zoom into its future earnings reveal that its forward P/E valuation looks very attractive. Based on our estimations, FY07, FY08 and FY09 forward P/Es are respectively 8.2x, 2.0x and 2.3x. Theoretically, the company is way under-valued. Big part of the earnings will come from the two prestigious developments – The Marq on Paterson Hill and Hilltops. Note that we have not priced in the earnings to be contributed by the redevelopment of its latest acquired land bank – The Ardmore.
Reiterate BUY with fair value at S$7.55; strong potential for upward revision. Our fair value remains unchanged at S$7.55 per share based on parity to its RNAV. We are bullish on the Company and reiterate our BUY for the third time in a week.
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