This Undervalued Property Development and Investment Company is Entering Australia
SingHaiyi Group Ltd (SGX: 5H0) and its controlling shareholders, Gordon Tang and Celine Tang, are subscribing for 175.1 million units of the stapled securities of the Australia-listed Cromwell Property Group at a price of A$0.9691 per security. The stapled security consists of one ordinary share in Cromwell Corporation Limited stapled to one unit in Cromwell Diversified Property Trust.
The 175.1 million units of stapled securities mentioned collectively represent a 9.9% stake in Cromwell Property Group, and have a total value of A$169.6 million (S$172.4 million).
SingHaiyi’s share of the subscription is for 61.0 million units for A$59.1 million (which works out to be a 3.45% stake in Cromwell Property Group) and the company will be funding the purchase with internal cash. Gordon Tang and Celine Tang are participating in the deal through their investment vehicle, Haiyi Holdings Pte Ltd.
Cromwell Property Group is a global real estate investment manager with assets in Australia, New Zealand and Europe. It is also the sponsor of Singapore’s first Euro-denominated real estate investment trust, Cromwell European REIT (SGX: CNNU). Gordon Tang and Celine Tang are cornerstone investors in the REIT, with a collective interest of around 13.9%.
SingHaiyi is a property development, investment, and management services company. Celine Tang, who is also its managing director, had the following comments on the deal:
“We are constantly on the lookout for opportunities to grow and broaden our income streams through yield-accretive acquisitions, quality property developments and astute investments. The subscription in stapled securities of Cromwell Property Group will firmly position SingHaiyi to be a direct beneficiary of the strong growth potential of Cromwell’s prime Australian commercial property assets.
The subscription will also offer SingHaiyi unprecedented exposure to Cromwell’s wider portfolio of high quality income producing assets across Australia, New Zealand and Europe. With its track record as an established global real estate investment manager, we are confident that Cromwell will deliver significant value creation for SingHaiyi.”
According to the website of the Australian Securities Exchange, Cromwell Property Group has an annualised dividend yield of 8.14% and a price-to-earnings ratio of 6.5, at a market price of A$1.025.
As of 30 September 2017, SingHaiyi had S$105 million in cash and cash equivalents, and S$106.4 million in gross borrowings. With a book value per share of S$0.1793 and a current share price of S$0.122, the company is trading at a low price-to-book (PB) ratio of just 0.68.