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Looking back into the deal in 2017 when ST Eng first purchased its 51% stake, ST Eng paid ~55-60mil for its 51% JV stake which was close to book value.
JV accounting means that any accounting profit/loss from SPTel will be 51% equity accounted on the carrying value on ST Eng's own BS. In addition, any declared dividend upwards to ST Eng will also be deducted from the carrying value accordingly.
SPTel's 2025 carrying value of ~65mil is not too different from its purchase consideration back in 2017 of 55-60mil, which meant that either (1) did not make much net profit over the years AND/OR (2) SPTel had declared most of its profits as dividends upwards...Regardless, selling it at 2x of the book value is a good deal if it hadn't made much net accounting profit over the years. The buyer is a newly closed infrastructure PE fund.
Are there still much more of such "undervaluation" on ST Eng's balance sheet? I would assume probably not since the goodwill/intangibles (a result of years of acquisitions) is already close to 2x of its equity.
ST Engineering unit, SP Group to sell joint venture for S$290 million to Singapore fund manager Seraya Partners
ST Engineering Urban Solutions acquired a 51 per cent stake in SPTel in May 2017, prior to which it was wholly owned by SP Group since 1997.
The proposed sale is expected to yield a one-off gain of around S$80 million for ST Engineering based on its carrying value for SPTel of around S$65 million. Besides this, it is not expected to have material impact on ST Engineeringâs consolidated net tangible assets per share and earnings per share for the current financial year.
For the financial year ended December 2024, SPTel posted S$72 million in revenue and a S$4 million net loss. Its revenue is not consolidated into the financials of both joint venture owners as it is equity accounted.Â
https://www.businesstimes.com.sg/compani...a-partners
ST Eng acquisition of 51% of SPTel in 2017:Â https://links.sgx.com/FileOpen/SGX%20rel...UU8KQMV4L9
JV accounting means that any accounting profit/loss from SPTel will be 51% equity accounted on the carrying value on ST Eng's own BS. In addition, any declared dividend upwards to ST Eng will also be deducted from the carrying value accordingly.
SPTel's 2025 carrying value of ~65mil is not too different from its purchase consideration back in 2017 of 55-60mil, which meant that either (1) did not make much net profit over the years AND/OR (2) SPTel had declared most of its profits as dividends upwards...Regardless, selling it at 2x of the book value is a good deal if it hadn't made much net accounting profit over the years. The buyer is a newly closed infrastructure PE fund.
Are there still much more of such "undervaluation" on ST Eng's balance sheet? I would assume probably not since the goodwill/intangibles (a result of years of acquisitions) is already close to 2x of its equity.
ST Engineering unit, SP Group to sell joint venture for S$290 million to Singapore fund manager Seraya Partners
ST Engineering Urban Solutions acquired a 51 per cent stake in SPTel in May 2017, prior to which it was wholly owned by SP Group since 1997.
The proposed sale is expected to yield a one-off gain of around S$80 million for ST Engineering based on its carrying value for SPTel of around S$65 million. Besides this, it is not expected to have material impact on ST Engineeringâs consolidated net tangible assets per share and earnings per share for the current financial year.
For the financial year ended December 2024, SPTel posted S$72 million in revenue and a S$4 million net loss. Its revenue is not consolidated into the financials of both joint venture owners as it is equity accounted.Â
https://www.businesstimes.com.sg/compani...a-partners
ST Eng acquisition of 51% of SPTel in 2017:Â https://links.sgx.com/FileOpen/SGX%20rel...UU8KQMV4L9
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.
