Appeal Letter to Boustead Singapore for Fairer Offer

Date: February 16, 2023

Chairman & Board of Directors,
Boustead Singapore
Through: Mr Keith Chu,
Senior Vice President, Corporate Marketing & Investor Relations

RE: Appeal for Fairer Offer

Dear Chairman & Board of Directors,

Earlier this month Boustead Singapore announced a plan to take its 54.9%-owned subsidiary Boustead Projects private at an offer price of S$0.90 per share. SIAS has been approached by Boustead Projects’ minority shareholders who feel aggrieved at what they perceive is an offer that significantly undervalues their investment.  After examining the details of the offer, SIAS’s view is that the minority shareholders have a case, and calls upon Boustead Singapore to revise its offer upwards.

Although the S$0.90 offer price is 7.8 per cent above Boustead Projects’ close on Feb 3 of S$0.835 and 14.6% above the volume-weighted average price for the previous three months, it is only 71.1 per cent of the company’s last reported net asset value (NAV) of S$1.265 per share as of 30 Sep 2022.

Put differently, the valuation of 0.7x Price/NAV has left a bitter taste in the mouths of Boustead Projects’ minority shareholders given that most of the properties held in the books are valued at historical cost.

SIAS also notes that analysts have described the offer as not being in the interests of Boustead Projects’ shareholders. The Business Times in its 7 Feb 2023 report “Boustead Singapore makes offer for real estate unit; analysts say S$0.90 offer price undervalues Boustead Projects’’ quoted an analyst at Global Equity Research who publishes on Smartkarma, calling the offer price “unattractive” and noted that Boustead Projects’ share price had exceeded the offer price as recently as June last year.

CGS-CIMB analyst Ong Khang Chuen, meanwhile, said the offer price “favours Boustead Singapore”. The brokerage’s own estimate of Boustead Projects’ revalued NAV is S$1.79, which is roughly double the offer price.

SIAS recognises that no offeror can realistically be expected to pay the maximum perceived value for a company it is seeking to acquire and privatise. Offerors will always pitch their prices as low as possible whilst offerees will always hope for the highest possible price.

However, the discount to asset value in this case is simply too large to ignore so a middle ground should be found. An upward revision, perhaps closer to 1x Price/NAV is clearly justified.

Given that the S$0.90 offer price is not final, SIAS therefore calls upon to Boustead Singapore to table a fairer offer.


David Gerald
President and CEO