CDL in global spotlight as father, son tussle for board control; OCBC, Yangzijiang take beating

SINGAPORE - City Developments Limited (CDL) made global headlines last week, when Mr Kwek Leng Beng took his son Sherman Kwek and several other board directors to court on Feb 26 over an “attempted coup” to allegedly seize control of CDL’s board.

The

ensuing tussle for control

could be long and painful, not just for father and son, but also for the company’s corporate governance reputation among investors. Minority shareholders are already grappling with a wave of analyst downgrades due to potential leadership changes and uncertainty over the company’s outlook.

Mr Kwek Leng Beng, 84, is executive chairman of CDL, while Mr Sherman Kwek, 49, is its group chief executive. CDL, a leading Singapore property developer, is behind iconic real estate projects that include

The Orie in Toa Payoh,

The Sail@Marina Bay, Republic Plaza and the South Beach mixed development.

CDL shares

were halted from trading

and a press conference to announce the company’s 2024 results was abruptly cancelled on Feb 26, as a battle for board control began to unfold.

Mr Kwek Leng Beng is alleging

that his son and four directors acting with him bypassed the nomination committee, appointed two independent directors against legal advice and restructured key committees to sideline him as executive chairman. He has also called for the removal of Mr Sherman Kwek as group CEO.

The nomination committee of a board of directors is responsible for overseeing the selection, appointment and evaluation of board members and senior executives.

Excluding the two new independent directors, there are nine directors on CDL’s board. Four are on Mr Sherman Kwek’s side, while three, including former Economic Development Board chairman Philip Yeo, are siding with Mr Kwek Leng Beng. The older Mr Kwek also controls CDL’s parent, Hong Leong Group.

In response, Mr Sherman Kwek alleges that the underlying reason for his father’s actions

is his long-time adviser, Dr Catherine Wu,

who had been interfering in matters going well beyond her scope, which he and the majority directors found troubling.

The younger Mr Kwek also asserted that neither he nor the majority of directors had attempted to oust the chairman, and

called his father’s actions “incredibly disappointing”.

Shares of CDL last traded at $5.12 with a market value of $4.66 billion on Feb 25. They should resume trading on March 3, three working days after halting trade, or face suspension, according to stock exchange rules.

Stocks on the move

In the local banking sector, shares of OCBC Bank declined, while rivals DBS Bank and UOB saw their shares hit new highs in February after announcing record profits in 2024 and higher payouts.

Shares of OCBC fell by almost 3 per cent last week, closing on Feb 28 at $17.21 despite the bank announcing on Feb 26 that its net profit for 2024 hit a record of $7.59 billion and it would pay a special dividend of 16 cents to shareholders.

The bank’s fourth-quarter net profit, which rose 4 per cent year on year to $1.69 billion, missed a $1.81 billion forecast by analysts. It also proposed a final ordinary dividend of 41 cents per share for 2024, down from 42 cents in 2023.

The biggest loser on the Singapore Exchange last week was Yangzijiang Shipbuilding, which fell by more than 24 per cent to close the week at $2.38, despite on Feb 26 reporting net profits of 6.6 billion yuan (S$1.2 billion) for 2024, up 61.7 per cent from a year ago.

The shipbuilder’s shares plunged on heavy institutional selling after a US proposal on Feb 21 to impose fees of up to US$1.5 million (S$2 million) on Chinese-built vessels entering American ports. The sell-off wiped about $3 billion off the Chinese shipbuilder’s market value within a week.

Thakral Corporation, a company listed on the mainboard, rose by almost 10 per cent to close the week at 79 cents after it reported a jump in earnings for 2024. It was also the company’s highest level of earnings in seven years.

The company, which invests in property in Australia, Japan and Singapore, and manages beauty, fragrance and lifestyle brands in China, India and South-east Asia, reported earnings of $28.8 million for 2024, which is 3.5 times higher than its 2023 earnings of $8.2 million.

Thakral proposed a final dividend of two cents, bringing its total 2024 dividend to four cents. Based on its share price on Dec 31, 2024, that translates to a yield of 6 per cent, which is higher than the three local banks’.

Higher dividends

A rising number of companies announced higher dividends during the recent earnings season.

CapitaLand Investment (CLI) rose by almost 5 per cent to close the week at $2.56 after it proposed a core dividend of 12 cents per share, as well as a special payout of 0.031 CapitaLand Integrated Commercial Trust units per CLI share.

CLI’s board also proposed to increase its annual dividend to a minimum of 50 per cent of cash net profit and portfolio gains from asset recycling.

This came after the real estate investment manager reported bouncing back

into profit in the second half of 2024.

For the full year, net profit surged 165 per cent to $479 million, from $181 million in 2023.

Its chairman Miguel Ko noted that the company is “confident of the momentum and future growth of CLI’s fund, lodging and commercial management businesses”.

Utilities manager Sembcorp Industries rose by more than 7 per cent to close at $6.09. It proposed on Feb 27 a final dividend of 17 cents per share, more than double the eight cents declared a year ago, after reporting a 7 per cent rise in net profit to over $1 billion for 2024.

Raffles Medical Group also announced higher dividends.

The private healthcare provider rose more than 11 per cent to close the week at 92 cents after it revised its dividend policy to pay out at least 50 per cent of its sustainable earnings annually.

This was despite its 2024 net profit falling 31 per cent to $62.2 million compared with a year ago.

It also plans to buy back up to 100 million ordinary shares over the next two years, it said on Feb 24.

What to look out for

The appeal hearing for John Soh Chee Wen and Quah Su-Ling is set to take place on March 3 and 4.

The pair were convicted of multiple charges and

sentenced to jail in 2022

after being found guilty of manipulating the shares of Blumont Group, Asiasons Capital and LionGold Corp, collectively known as BAL, between August 2012 and October 2013.

During the period, the share prices of BAL were artificially inflated, leading to losses estimated at around $8 billion for investors

when the stocks crashed.

During this week’s hearing, Soh’s and Quah’s defence lawyers aim to challenge key prosecution witnesses in an effort to overturn the sentences for their roles in what is now Singapore’s largest securities fraud.

Meanwhile, markets could be volatile with the US manufacturing purchasing managers’ index (PMI) for February due on March 3, while services PMI for the month will be out on March 5.

The PMI provides a reliable outlook on the state of the US manufacturing and services sector.

ADP, America’s largest payroll provider, will release employment change data for the month of February on March 5. The data will show the number of people privately employed in the US for the month.