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17-07-2020, 06:51 PM
(17-07-2020, 04:17 PM)Shiyi Wrote: Book value at $650 million and sold at $430 million, that is a whopping discount of 34%.
Either it is a fire sale or the valuation is out of whack, or both.
And it's difficult to see how the disposal benefits the shareholders.
OUE values its investment properties based on fair value accounting, ie. they will hire "independent" external valuers to determine this book value.
But of course, book value as per independent valuer and market value as per buyer are 2 different tings.
This is also probably why we seldom see any listed companies that uses fair value accounting, having their prices trade close to their book value (with the exception of some miracle REITs but it is mainly driven by the market loving the "predictable income" that is largely distributed as dividends). Most of these fair value accounting companies are always at a discount to NAV. This probably provide some clues whether for this situation, on whether it is a fire sale or the valuation is out of whack, or both.
I am not a certified financial advisor and so nothing of what I say should be construed as financial advice. Please consult a certified financial advisor for advice instead.