Hehe’s fastest private delisting in May. This week’s circular was issued. After the revaluation of the total assets, it will rise.
The privatization plan of the old local real estate developer Hehe Industrial (00054) is expected to progress again this week. According to investment bank news, the privatization circular was published as soon as possible this week. If the proposal is approved by shareholders, Hehe or officially delisted in May. Some people in the accounting profession said that the total value of assets of Hehe after the latest revaluation is likely to climb, which means that the privatization price will have a greater discount to the net asset value per share (NAV). Although the search data shows that the privatization proposals of the past large discounts have not been approved [Table 1], some real estate analysts believe that institutional investors will not be too concerned about the privatization price and NAV per share increase, estimated The Hehe privatization plan can be released by shareholders.
Hehe has been approved by the China Securities Regulatory Commission and sent a privatization circular at the latest on the 28th of this month. According to investment bank sources, the Hehe privatization circular was published as soon as this week, and the court meeting and special general meeting were held in mid-March. If the privatization is approved by the shareholders, it will be the fastest or delisting in May, and the 47-year listing history will be put to an end.
Flagship rental value continues to rise
However, whether the merger and privatization can be successfully passed, especially the privatization price per share is much lower than the NAV per share, and the consortium consortium led by the major shareholder Hu Yingxiang has clearly stated that it will not increase the privatization price. The NAV of Hehe as of the end of September last year was 60.21 yuan per share, while the privatization price was 38.8 yuan, a 35.6% discount. However, brokerage Morgan Stanley pointed out that if the hidden value of the hotel business is taken into account, Hehe’s NAV per share can reach 66 yuan, that is, the privatization price can be more than 40% discount to NAV.
Lin Hong-en, director of Lixin Dehao, explained that among the property stock assets, the properties used for rent collection will be accounted for at market valuation. The properties under construction, land bank, self-use property and construction equipment will be depreciated by cost method. However, when a company is privatized, all assets need to be revalued using a valuation method to allow shareholders to be informed of the latest asset valuation. He said that as the local property market has shown an upward trend in the past few years, the valuation of properties that have been accounted for by the cost method in the past will be upgraded.
The latest valuation of the property of Hehe and its properties has been further revised. It is estimated by industry insiders that it is not unrelated to the continuous increase in the rental value of the Group’s flagship property, Wanchai. In the past year, the rents of office buildings in the major commercial districts of Hong Kong have been increasing. The rent of the top office buildings in Central has risen to $200 and the maximum rent in Admiralty has reached $130. Many financial tenants have moved to Wan Chai District, which is more affordable. , pushing up office rents in the area.
According to the information of the estate agent, the Hehe Center sold about 50 yuan at the beginning of last year, and rose to 55 yuan in the middle of the year. In November, it saw a higher price of 62 yuan, and the increase rate was as high as 24% in one year [Table 2]. Guo Hanjun, director of the business unit of Midland Commercial Area, revealed that many tenants began to look for office units in Wan Chai as office rents in Adjacent District Admiral rose to a higher level.
The current price is 4.9% from the offer price.
Looking up the information, in the past 10 years, a total of 8 real estate or property investment listed companies have proposed privatization. It is not unreasonable that the privatization price is more than 30% discount to NAV per share. In the end, they all failed, including Hengsheng Real Estate (00845) and Star. Lion Real Estate (00535, now known as Jindi Commercial). As for New World China (00917, delisted), the privatization price proposed in 2014 is a 32.5% discount to NAV per share, and it will not work. However, after two years of resurgence, the privatization price fell to less than 30% compared with the NAV per share, and finally passed.
However, Cai Jinqiang, a real estate analyst and president of Oulu Capital and investment director, believes that institutional investors will not care too much about the change in net asset value per share when considering the privatization proposal, and that the “normal people will agree” unless they agree with privatization. Someone collected the source of the intention to stalk from it. He bluntly said that when calculating the net asset value per share, by adjusting the capital reduction rate, the final figure can be affected, which does not necessarily reflect the objective value of the asset. Generally, after the privatization proposal is proposed, the share price will be pushed up to 5% to 10% discount to the offer price. The current share price of Hehe (36.9 yuan on Friday) is still 4.9% lower than the offer price of 38.8 yuan. I believe the normal shareholders should not The privatization will be vetoed, and the stock price will fall sharply.