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I REFER to your article, 'Is CK Tang value fully reflected?' (BT, July 15).
The article brought to mind another major retailer in Orchard Road which partially owns a property which is similarly undervalued and not fully reflected by the company. That retailer is none other than Isetan Singapore, which occupies five floors of retail space in Wisma Atria and of which two floors are actually being rented out.
Wisma Atria building, which is directly opposite CK Tang on Orchard Road, is 74.23 per cent strata-title owned by SGX-listed Starhill Global Reit. Isetan Singapore, which is also listed on the Singapore Exchange, owns the other 25.77 per cent.
Starhill revalued its property last Dec 31 at $849.8 million, whereas Isetan did not. Using a simple rule-of-thumb computation, Isetan's retail space could be worth $295 million. Yet it is reflected in its books at $35 million, which gave the company a net tangible asset per share of $4.24. If fully reflected, it should be worth $10.54.
Isetan's shares have been thinly traded at around $3.10. It goes to show many of its shareholders and investors are not fully aware of the true net tangible asset value of the company. While not blaming Isetan for treating its major leasehold asset in accordance with accounting convention, it begs the question whether its financial statement should also highlight, in a side note, its true net tangible asset value to reflect greater transparency and in all fairness to all interested parties.
Going forward, perhaps it is time that the SGX step in and set a ruling that all companies listed on the exchange must revalue their assets annually to fully reflect their true net tangible asset value, regardless of whether it is leasehold or freehold, rented out or owner-occupied or its business type.
Lau Chee Kian
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