Making property groups disclose revalued net asset value would benefit investors

I AM tired of low-ball takeover offers by major shareholders who try opportunistically to privatise property groups at big discounts to book value. What irks me more is that the net asset value (NAV) of a property group often understates the true value of the business, which is better captured by the revalued NAV (RNAV).

In December 2022, I wrote in The Business Times that as a shareholder of Chip Eng Seng (CES), I would reject the offer by Gordon and Celine Tang’s Tang Dynasty Treasure of S$0.75 per CES share because the price is too low. The offer price represented a discount of 24 per cent to CES’ NAV per share of S$0.9906 as at end-June 2022.

I opined that the NAV could be conservative, as CES has an exciting property development pipeline. Indeed, Xandar Capital noted in its letter dated Dec 22, 2022, that the RNAV of CES is about S$1.048 billion or S$271 million higher than the NAV as at end-June 2022 of S$777 million. Xandar is the independent financial adviser to the directors of CES, who are considered independent for the purpose of making a recommendation to shareholders on the offer by Tang Dynasty Treasure.