Zico Capital, independent financial advisor to the privatisation of Low Keng Huat (Singapore), believes that the 72 cents per share offer is "not fair" but "reasonable" and is recommending shareholders to accept the offer.
The offer by the company's managing director Marco Low Peng Kiat and his mother Seah Soh Seng was tabled on Nov 28 and will close on Jan 14.
Low Keng Huat was founded back in 1969 and was listed on March 9 1992. It was a building contractor but is more active in recent years with its property investments, holding assets such as the retail units of Paya Lebar Square.
In its opinion issued on Dec 31, Zico Capital notes that the 72 cents per share offer is a 17.07% premium above the last traded price of 61.5 cents before the offer was launched.
Low Keng Huat shares, typically thinly-traded, were as low as 30 cents half a year ago.
As at July 31, its NAV was $580.93 million, or 79 cents per share.
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However, when its various properties were revalued, the RNAV would be $1.26, notes Zico Capital.
This implies a ratio of 0.57 x, which is within comparables such as Wing Tai Holdings, Bukit Sembawang, Sing Holdings, Tuan Sing Holdings and Oxley Holdings.
Zico Capital estimates that the company is valued at between 87 and 89 cents per share, which is higher than the 72 cents offer.
Low Keng Huat shares closed at 73 cents on Dec 30.
