More developers to get delisted to dodge hefty QC fines

Is Wing Tai the next Keppel Land?

More developers might opt to get delisted to dodge hefty penalties for their unsold properties under Qualifying Certificate (QC) rules.

A report by Maybank Kim Eng stated that a recent spate of privatisations among developers--highlighted by Keppel Corp’s success in taking Keppel Land off the table--has revived privatisation prospects for the sector.

Other developers which have chosen to get delisted include Popular Holdings, which delisted in January 2015, and SC Global, which delisted in December 2012.

Popular Holdings opted to delist to avoid QC penalties for two of its residential projects. Meanwhile, SC Global made a pre-emptive delisting in December 2012 ahead of its deadline to sell all units in The Marq.

“This privatisation move suggests that penalties for unsold units under the QC ruling are at the top of the mind of some developers. De-listing is a real option for them,” wrote Maybank Kim Eng analyst Derrick Heng.

Heng believes that Wing Tai is the next prime candidate for de-listing, as it has a large number of unsold units at its two projects, Le Nouvel Ardmore and Nouvel 18.

“We believe it is most susceptible to penalties. Assuming the sell-by dates for both projects are extended by another three years and current inventories remain unsold, it would cost Wing Tai a hefty SGD211m in cumulative penalties. While Chairman Cheng Wai Keung said in Jul 2014 that he did not intend to take the delisting route, this option cannot be ruled out,” he stated.