OUE (formerly: Overseas Union Enterprise)

[Shiyi]

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.

[weijian]

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.

[opmi]

Valuation are opinions. Can pick and choose for whatever purpose you want it to be.
Eg. Get a loan, valuation as high as possible. Pay taxes, as low as possible.

Just shop around. Just like IFA shopping.

[¯|_(ツ)_/¯]

OUE 1H result
Rev $311m (vs 432m)
GP $121m (vs 154m)
Loss $186m (vs 84m)

https://links.sgx.com/FileOpen/OUE_Finan...eID=626253

Wear mask and keep your social distance, everyone

[¯|_(ツ)_/¯]

OUE Commercial Reit - Mandarin Orchard 

HOTEL STATEMENT 
The Ministry of Health (MOH) is investigating 13 cases of COVID-19 infection amongst individuals who had served Stay-Home Notice (SHN) at Mandarin Orchard Singapore (333 Orchard Road) between 22 October and 11 November 2020. As a precautionary measure, the Hotel will stop accepting new guests with immediate effect. Those currently serving SHN with us will be moved to another SHN dedicated facility, and we are making arrangements to check out all other in-house guests progressively. Restaurant and event spaces within the Hotel will also be closed until further notice. 

The safety and well-being of our guests and employees remain the utmost priority to all of us at Mandarin Orchard Singapore. We are working closely and cooperating fully with the relevant authorities in their investigations, and will continue to implement stringent infection control measures across our operations, in consultation with MOH and the National Environment Agency. COVID-19 swab tests for all full-time and part-time Hotel employees will also be carried out.

Stay home and stay safe, everyone.

[Shrivathsa]

Interesting, another offer from a company to minority shareholders to exit investments, this time it is OUE, a good analysis from Dr Wealth on whether it makes sense to exit, https://www.drwealth.com/oue-stock-jumpe...ders-sell/

The original SGX link announcement is here, https://links.sgx.com/FileOpen/OUE_Annou...eID=803948

Per se, while it does not really look like a fair or reasonable offer, in some ways, if one has been stuck with OUE for a long time, I can understand the temptation to call it quits as minority shareholder,

[weijian]

in some ways, if one has been stuck with OUE for a long time, I can understand the temptation to call it quits as minority shareholder,

hi Shrivathsa,

Since OUE is listed, all an OPMI needs to do - is to sell their shares on the open market whenever it is open from 9am-5pm on weekdays (Except public holidays). So why would one "be stuck with OUE for a long time"?

Of course, that is unless you are some closed end fund whom is owned by the same ultimate owner of OUE..

[weijian]

This is an interesting question bought up by SIAS on an additional stake that OUE bought of a HKEX listed firm (GPI) that had ops in China.

Negative goodwill is recognized when you pay "below market price" for an asset. I suppose when OUE bought the additional stake, it was much lower than the stated NAV and hence OUE decide to provisionally recognize a negative goodwill. Negative goodwill recognition is legit based on accounting standards but when one decides to use it, it just reflects aggressive accounting.

From the way the response is framed, it seems either (a) Indonesian Godfather was blindsided, and/or (b) things really got much worst in the 2nd half of 2025 compared to the first half.

RESPONSES TO QUESTIONS FROM SIAS

The Group increased its stake in Gemdale Properties and Investment Corporation Limited (GPI) by 3.85% for $30.3 million. The transaction initially resulted in the recognition of negative goodwill of $94.85 million, which was subsequently reversed
after further assessment of the market conditions in China that affected GPI. An impairment loss of $20.0 million has since been recognised in FY2025.

(i) Can the board confirm whether it approved the follow-on investment in Gemdale, and explain the due diligence performed? In particular, how does the board reconcile the initial recognition and subsequent reversal of negative goodwill, and what does this indicate about the robustness of the original assumptions?

Answer:
The acquisition of an additional 3.85% stake in GPI in 2025 was subjected to the same rigorous investment considerations as any new investments. In addition, the Board and the Management team conducted a site visit in late 2024 to several properties managed or developed by GPI in China, and had meetings and discussions with the management of GPI to discuss GPI's performance and their views on the market outlook. Management also performed an independent analysis of the property market conditions in China and an assessment of GPI's financial performance.

In assessing the recognition and subsequent reversal of negative goodwill, the Group performed a provisional purchase price allocation ("PPA") at the time of acquisition in 1H FY2025 and updated the PPA at year end. Following the provisional PPA assessment, a negative goodwill was recorded in the Group's 1H FY2025 results. The Group continued to monitor the real estate market in China and engaged GPI's management through several meetings and a site visit in November 2025. Due to additional pertinent information obtained on the weaker market conditions in China, which was not fully evident at the time of the provisional PPA, it was decided during the final PPA assessment that the negative goodwill recorded in 1H FY2025 should be reversed in 2H FY2025. The provisional and final PPAs were also reviewed by the Company's external auditor

https://links.sgx.com/FileOpen/OUE_Respo...eID=884650