S$0.55-LKTS.SI
- The tightly-held stock was one of the very few firm spots in a generally weak market yesterday, with STI down 13 points or 0.4%.
- We would not rule out some taking the view LKT is a potential privatization candidate.
- Afterall, the Lee family has been buyers of the stock all these recent years. Their last purchase was of 32,000 sha r e s on Ma r 3rd a t 53.5 c ent s e a ch. Through the family holding company Lee Kim Tah Investments (LKTI), we believe they own about 347.52 mln shares or 68.76%.
- LKT’s latest NAV is 70.04 cents, implying 21.5% “discount”, which however is nothing extraordinary in the sector, as we have highlighted on several occasions. (LKT’s key assets are the 50% owned Jurong Point Shopping Centre and 25% owned adjacent retail mall. (Guthrie owns the remaining.) $27.6mln revaluation gains from these investment properties helped the company post net profit of $26 mln for Q1 ended Mar ’11, a 173% “surge” from $9.5 mln a year ago
- However, note that LKTI is a family holding company, ie attendant complexities / possible complications. (LKT is managed by Lee Soon Teck, one of the sons of the late founder, and his son Edwin.)
- Secondly, speculation of privatization has gone on for years, which is not to say it will never happen.
- But, based on dividend of 1 cent a share for at least the last 4 years, the 1.8% yield is no enticement for patience. (LKT paid a special dividend of 2.13 cents back in 2006, on top of the first & final normal 1 cents, arising from development profits.)
- We would give the stock a miss, especially given the current “enthusiasm” for potential privatization candidates in the property sector (eg SC Global, which if true, would make Simon Cheong generous in giving “advance notice” of his plans.
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