Sunday, 14 November 2021

Reply by SGX on Best World and my View on the Company Value

As a neutral and unvested individual, I had written to SGX Regco on the unfairness faced by Best World Shareholders.

SGX Regco has replied and updated Best World is evaluating a off market share buyback scheme or complete takeover of minority stake to delist. This is good news.

What is a Fair Price?

Looking at its comparable, these are the P/E Range

To me, Best World should be buying out at a 10 to 15 times P/E range. Assuming an eventual full year EPS of 23 cents, its fair for the majority owners to offer $2.30 to $3.45 per share. Anything less is a signal that they are making use of SGX regulations to make an inequitable offer and is something SGX has to voice out because it is their actions which partly led minority shareholders to be in this predicament.

My Views

At $2.30, this means the company's market cap will be $1.26 billion and the majority shareholders will have to finance a $620 million takeover for stakes they do not own. Best World has cash reserves of $386 million. It is quite easy to seek another $300 million from financial institutions with a business who is generating an average free cash flow of $100 million 

Let's see whether fairness is present in Singapore's market.

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