Hwa Hong Corp announced on July 26 that the current Ong directors and their immediate family, who own 29.26% of Hwa Hong’s shares, intend to accept Sanjuro United’s offer of 40 cents per share by the final closing date of the offer on Aug 1.
Sanjuro United comprises of a consortium of four parties. Its 40 cents offer represents a discount of around 21% to the revalued net asset value of 50.52 cents of Hwa Hong, based on the revaluation surplus of its property portfolio by independent valuers. Analysts who have looked at the valuations believe that a 21% discount is a lot better than the valuations of developers which range form discounts of 30% to as high as 60%. For instance, HongKong Land is trading at 0.32x its NAV of US$15.05 per share. And Hongkong Land’s portfolio in Singapore and Hong Kong comprises prime Grade A properties in the CBD.
Hwa Hong’s property portfolio’s most interesting property is probably its data centre in Paya Lebar. UOB Kay Hian had recommended that shareholders accept Sanjuro’s offer as far back as June, and invest their monies elsewhere, with the quip “a bird in hand is worth two in the bush”.
It appears that the current Ong directors and their families may have taken heed, given that no confirmed competing offers were announced by 5 pm on July 25.
