Categorized | Singapore Trading News

Share delisting trend seen to continue on SGX

Recent share delistings, especially among property counters on the Singapore Exchange (SGX), have raised the interest of small shareholders.

This is because delisting bids can come with attractive exit offers as high as a 20 per cent premium to the stock’s last traded price, according to Liu Jinshu, SIAS Research investment analyst.

Analysts expect the delisting trend to continue, given the lacklustre mood in the stock market.

The delisting bids of property counters MCL Land last November and Allgreen in May have left shareholders looking out for more counters that may follow suit.

Analysts said potential privatisation targets are usually those that have a majority shareholder owning between 50 and 70 per cent of the company and are trading at a steep discount to their book value or revalued net asset value (RNAV).

Liu said: “Recently we’ve seen several delisting cases on the SGX, and names have popped up as potentials…..for example Guocoland and Ho Bee.”

Analysts said listed companies may also want to take their companies private when their shares are thinly traded on the exchange.

They added that some companies may also choose to delist here but to be relisted on another bourse with more attractive valuations.

Terence Wong, co-head of research at DMG & Partners, said: “Some of the sectors that could likely see such privatisation would likely be in the consumer space, as well as some of the S-chips. Many of the S-chips are trading at just half of what they used to be trading at.”

Some non-property companies that have delisted include Chinese retailer Time Watch and Taiwanese lender Financial One.

Market watchers said one issue that may crop up during delisting is the protection of minority shareholders’ interests.

Nicholas Mak, executive director for research & consultancy at SLP International, said: “Let’s say the listed entity were (is) currently traded at a significant discount to their current IPO price, for some of their loyal shareholders who bought shares from the first day when it was listed, once it goes delisted, I think some of them may be deeply disappointed that they have suffered quite a significant loss.”

Besides ending up with a loss, minority shareholders may also be deprived of future share price gains when a company is delisted.

Adapted from CNA (By Linette Lim)

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