The Straits Times Index (SGX: ^STI) put on a fantastic showing last month, adding 6.5%, or some 204 points, to finish June at 3,321.6. Of the 30 index components, 26 were in the green; three were in the red while Sembcorp Industries Limited (SGX: U96) ended the month unchanged.
Property outfit, City Developments Limited (SGX: C09), was the best performer of the lot, rising 15.2% to S$9.47. During the month, the company made public its intention to fully acquire its London-listed subsidiary, Millennium & Copthorne Hotels (LSE: MLC), or M&C. City Developments is offering £6.85 per share for the remaining 34.8% of M&C’s shares that it doesn’t own. The offer price is a premium of around 37% to M&C’s closing price on 6 June.
City Developments attempted to privatise M&C in late 2017, at a share price of £6.20. Back then, the Singapore developer failed in its bid as less than 50% of the minority shareholders of M&C agreed to the deal. The chances of the current deal going through are higher, as owners of 43.5% of M&C’s shares (as of 20 June 2019) that are not held by City Developments have already pledged to accept the offer.
Sherman Kwek, CDL’s group chief executive, said the following in the announcement press release:
“Taking M&C private is in line with CDL’s strong focus on boosting recurring income and enhancing underperforming assets. We are pleased to have garnered the support of M&C’s independent directors and key minority shareholders. The offer enables shareholders to exit an illiquid stock at a significant premium. We believe that a privatised M&C will be in the best position to navigate the increasingly challenging and competitive global hospitality landscape with agility and nimbleness. M&C will be able to leverage CDL’s significant resources, comprehensive real estate capabilities and global network to reposition its assets and drive sustainable hotel performance.”
Other property companies that were in the green include UOL Group Limited (SGX: U14) and CapitaLand Limited (SGX: C31). Shares in UOL rose 11.7% to S$7.55 while that of CapitaLand gained 9.6% to S$3.53.
CapitaLand unveiled the new, and much-awaited, Funan to the public when it re-opened its doors on 28 June. Throngs of shoppers descended upon the new shopping mall at North Bridge Road, which is home to over 190 brands clustered around six passion themes – Tech, Craft, Play, Fit, Chic and Taste. Funan has an occupancy rate of 95% for the retail side and 98% for the offices.
CapitaLand also completed its transaction with Temasek to acquire all the issued shares of Ascendas Pte Ltd and Singbridge Pte Ltd at the end of June, and will operate as a unified CapitaLand group from 1 July.
On the other hand, the biggest loser in the Straits Times Index was Dairy Farm International Holdings Ltd (SGX: D01); the pan-Asian retailer’s shares fell 6.5% to US$7.15.
Dairy Farm’s shares have not been performing well thus far in 2019, which could be due to poor financial performance for the fiscal year ended 31 December 2018. For the year, revenue grew 4% year on year to US$11.7 billion but net profit plunged 77% to US$92 million. To improve things, Dairy Farm’s supermarkets and hypermarkets businesses are undergoing a multi-year transformation plan. It will be interesting to see if Dairy Farm can turn its overall business around.
The SPDR STI ETF (SGX: ES3), an exchange-traded fund which can be taken as a proxy for the Straits Times Index, was valued at a price-to-earnings ratio of 11.8 and had a distribution yield of 3.4% as of 28 June 2019.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of City Developments, CapitaLand, and Dairy Farm International. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.