W Capital Markets, the independent financial adviser for the privatisation of Sinarmas Land , is of the view that the 31 cents per share offer tabled on March 27 is not fair but reasonable.

Sinarmas Land is controlled by Indonesia's Widjaja family, whose other listed entity here on the SGX is palm oil company Golden Agri-Resources . The Widjaja family back in 2023 privatised their coal mining company Golden Energy and Resources .

On one hand, W Capital Markets points out that the offer price of 31 cents per share is a P/NAV ratio of approximately 0.364 times, or a discount of 63.6% to the NAV per share.

W Capital Markets notes that Sinarmas Land shares had historically been trading at below its NAV per share with an average P/NAV of 0.263 times for the 36-month period prior to the offer.

Comparable Indonesian companies trade at between 0.16 times to 7.50 times NAV, and is higher than the median but below the mean P/NAV of comparable Indonesian compaines' 0.35 times and 0.41 times respectively.

Singapore comparable companies, on the other hand, trade at between 0.24 times to 0.58 times. At 0.36 times P/NAV, the offer is above the median but lower than the mean P/NAV of comparable Singapore companies' 0.33 times and 0.37 times respectively.

When gauged in terms of the earning-based valuation multiples, the EV/EBITDA of Sinarmas Land as implied by the offer price of 31 cents is 4.8 times and is within the range of both Indonesia and Singapore listed comparables.

This measure is the same as the mean but lower than the median EV/EBITDA of comparable Indonesian companies but below the mean and median EV/EBITDA of comparable Singapore companies.

The adjusted PER of Sinarmas Land, as implied by the offer price of 31 cents, is 5.3 times, and is above both the mean and median TTM P/E of comparable Indonesian companies and below the range of the TTM P/E ratios of comparable Singapore companies.

W Capital Markets, using a sum-of-the-parts valuation methodology, figures that Sinarmas Land is worth between 35 and 36.1 cents per share, higher than the 31 cents offer.

As such, W Capital Market is of the view that this offer is "not fair".

However, W Capital Markets notes that the offer price is at a premium of approximately 16.5%, 0.5%, 5.6% and 17.1% to the volume-weighted average price of Sinarmas Land shares for the 12-month, 6-month, 3-month and 1-month periods prior to the offer.

The IFA points out that for the 12-month period prior to the offer being announced, Sinarmas Land shares were traded on 243 market days out of a total of 250 market days, and that the average daily trading volume was just 0.55 million shares, equivalent to just 0.04% of the free float.

"Accordingly, the offer represents an exit opportunity for shareholders, given the low trading liquidity," to sell without incurring transaction costs.

Sinarmas Land in its FY2024 earnings announcement, says W Capital Markets, has warned that the global economic outlook has "weakened significantly" due to US tariffs.

"These intensified global trade frictions, worsened by escalating geopolitical tensions, volatile energy prices, and rising protectionism have heightened fears of a worldwide recession.

"These dynamics are expected to suppress global consumption, inflate costs, disrupt cross-border investment flows and negatively impact the group's businesses in FY2025 and beyond," says Sinarmas Land.

The IFA notes that there's no competing offer other than that already tabled by the Widjajas, whom already control more than 70.3% of the shares.

"The likelihood of competing offers is remote," says W Capital Markets. "After having carefully considered the factors above, we are of the opinion that the offer is 'reasonable'."