SCG - Scentre Group

[nulla nulla]

Security holders of Westfield Group (WDC) and Westfield Retail Trust (WRT) approved by the requisite majorities at meetings held on 29 May 2014 and 20 June 2014, resolutions in relation to a restructure of WDC (Restructure) and a merger of the Australian and New Zealand business of WDC with WRT (Merger Proposal).

As part of the Merger Proposal, each fully paid ordinary share in Westfield Holdings Limited and each fully paid ordinary unit in Westfield Trust will be stapled to each fully paid ordinary unit in Westfield Retail Trust 1 and each fully paid ordinary unit in Westfield Retail Trust 2 forming a new stapled security which will trade under the name Scentre Group (Group)(ASX Code: SCG).

Official quotation of the Group’s stapled securities is expected to commence at 10:09am (+/- 15 secs) AEST on Wednesday 25 June 2014 on a deferred settlement basis.
Quoted Securities: 5,325,518,228 fully paid stapled securities
ASX Code: SCG
Time: 10:09am (+/- 15 secs) AEST
Date: Wednesday 25 June 2014

 

[nulla nulla]

Opened at $3.21 then drifted down on initially small volumes. Volumes picked up fairly quickly pushing the price down to around $3.11 - $3.12. In the afternoon the big sellers moved in and pushed the price down to $3.08 where 42 million shares turned over out of the daily turnover of 72.5 million shares. Interestingly of the total $224.9m value of turnover only $57.7m went through "on market". Meaning $167.2m turned over off market.

I am curious as to how the market determined a value for Scentre. From the information provided pre-restructure, Scentre is expected to generate at least $0.02 more per share than WRT did. WRT had earnings of $0.2568 per share and when trading at $3.28 (closing price on 24 June 2014) traded at a price earnings multiple of 12.77.

If Scentre has earnings of $0.2768 can it be expected to trade at a p/e multiple of 12.77 times arriving at $3.53? On the other hand, WRT had an asset backing (NTA) of $3.52 when it closed at $3.28, does this mean SCG should trade at the same discount to its' NTA of $2.87, around $2.67?

I suspect some fund managers decided to unload and shopped around on the basis that the minimum they would take was $3.08. When they found enough buyers the subsequent trade(s) set the price for the rest of the market. Just my suspicions. As always, do your own research and good luck.

 

[VSntchr]

It certainly provided a bit of interesting movement, nice post Nulla.

Ex-Div for most of the sector tomorrow...not that SCG will be included in that

 

[SilverRanger]

It certainly provided a bit of interesting movement, nice post Nulla.

Ex-Div for most of the sector tomorrow...not that SCG will be included in that

I hate this merger crap, give me back WRT where at least I can bloody short it

 

[nulla nulla]

It looks like $3.53 isn't too far off. The market seems to be warming to the prospect of Scentre selling off equity in some of their shopping centers (while retaining the management rights) with the proceeds being put to reducing debt, acquiring more shopping centers and or buying back shares.

 

[nulla nulla]

SCG opened at $3.59 on Thursday then drifted down to $3.47. Last week this seemed to be a support level where in previous weeks it had been a resistance level. Then again maybe it was just coincidental in the lead up to the release of the report for the six months ending 30 June 2014.



Maybe the market was expecting more than a reiteration of the forecasts provided with the restructure proposal. It all seemed a little contrived and the market pushed the share price down to close out the day at $3.47. At one point the share price appeared to be grid locked with huge buy support at $3.48 and sell numbers at $3.49. Most of todays trading (apart from the T1 cross trade of 6,000,000 shares at $3.50 and the closing auction of 1,000,000 or so at $3.47) went through at $3.49 looking suspiciously like an accumulation exercise. it will be interesting tomorrow to see whether $3.47 can continue as a support level or will the analysts determine that Scentre "has not performed as expected" and push the price back down? As always do your own research and good luck.

 

[nulla nulla]

Bottomed out today at $3.42 for a handful of shares then climbed back to close out the day at $3.45. Westfield also released their report today with better growth figures than the projected growth for Scentre (hhhmmmm).

It is possible that todays sell down of SCG may be related to Westfield share holders unloading their free SCG shares and re-investing their proceeds in Westfield.

 

[skc]

Bottomed out today at $3.42 for a handful of shares then climbed back to close out the day at $3.45. Westfield also released their report today with better growth figures than the projected growth for Scentre (hhhmmmm).

It is possible that todays sell down of SCG may be related to Westfield share holders unloading their free SCG shares and re-investing their proceeds in Westfield.

That's unlikely... and why today? Plus those SCG shares were free!

SCG was downgraded by Citi and UBS overnight.

 

[nulla nulla]

That's unlikely... and why today? Plus those SCG shares were free!

SCG was downgraded by Citi and UBS overnight.

The tranche of shares issued to Westfield Corporation shareholders was substantial. I believe that the initial buying and selling since the restructure has mostly been accumulation by larger fund managers, maintaining their percentage of holdings in SCG at the levels they previously held in WRT. This has driven the price up to the benefit of former WDC holders and it is possible many of them, still holding Westfield shares, see the future growth & better increase in returns of Westfield over Scentre Group as a signal now is the time to switch their funds across to Westfield Corporation.

No doubt downgrades by Citi & UBS overnight could have contributed however the volume of turnover was not major. What sort of downgrades were they, from buy to hold, hold to sell? What price, if any, did they set?

 

[skc]

No doubt downgrades by Citi & UBS overnight could have contributed however the volume of turnover was not major. What sort of downgrades were they, from buy to hold, hold to sell? What price, if any, did they set?

Both downgrades were from buy to hold.

 

[nulla nulla]

Another factor would be brokers turning over their portfolio's looking to generate fees before the month end. In July Deutsche Bank had a target of $3.65. They considered that the market was overlooking the ability of Scentre to raise capital selling off part ownership of 100% owned assets, then using that capital to reduce debt, buy more assets and generate revenue growth through management rights etc. All adds to the volatility and opportunity for traders.

 

[nulla nulla]

The chart is misrepresentative (in my opinion) because it now includes the price action of WRT prior to the restructure.



However the price action since the restructure has SCG climbing from the initial close of $3.08 to test a high of $3.59. The share price swings have been well supported during this period offering plenty of opportunity for those with an appetite for risk. Recently it has found support around the $3.47 area with resistance around the $3.55 levels. Whether or not it can reach the Deutsche Bank target of $3.65 remains to be seen. They might need to convert a couple of 100% owned centers while retaining management rights first. Then it will get interesting. As always do your own research and good luck.

 

[nulla nulla]

There seems to be a bit of rumour mongering going around in respect of SCG at the moment. The Simon Property Group have been reported on Blaumberg as "not being interested" in Australian REIT's after rumours surfaced that they were running rulers over SCG and CFX. In addition there has been speculation that SCG will float off the New Zealand assets. Makes for a roller coaster ride for holders and entry/exits for traders. Closed at $3.43 today, down $0.11 on yesterdays close of $3.54.

 

[nulla nulla]

In contrast to the sell off of CFX in Friday's closing auction, SCG had a massive buy processed pushing the share price up to close on an inter-day high of $3.38.




I couldn't find any recent news that would explain the huge buy up. Maybe another acquisition rumour is gaining momentum? As always do your own research and good luck.

 

[nulla nulla]

The global economies are stressing about the volume of cheap oil from the middle east undermining the cost of shale oil production in the US. This combined with the slowdown of iron ore processing through the Chinese steel mills impacting on the iron ore price and all of a sudden it is "panic" time. The flow on impact on A-REIT shares becomes a repeat of a week or so ago and down go the share prices.

Panic selling as overseas investors, wary of the Australian Dollar falling against the US dollar, start selling off Australian shares. But wait, other buyers see the low cost of A-REIT's at US$0.83 as a bargain, particularly when the have yields of 5-6%.



And SCG touches $3.39 after the late sell off on Tuesday and early Wednesday, then rebounds on strong buying to close at the inter-day high of $3.49 (a very tasty $0.10 spread). Where to now in the lead up to ex-div? I dunno but you gotta love the volatility. As always, do your own research and good luck.

 

[VSntchr]

And SCG touches $3.39 after the late sell off on Tuesday and early Wednesday, then rebounds on strong buying to close at the inter-day high of $3.49 (a very tasty $0.10 spread). Where to now in the lead up to ex-div? I dunno but you gotta love the volatility. As always, do your own research and good luck.

I caught a little bit of that...but I was already weighted to SCG through another trade..so it was only a small position..and I didnt quite catch $3.39

But yes, the volatility is grand!

 

[nulla nulla]

The recent price action since 29 December 2014 on SCG has been a little bit hard to understand. Hitting $3.69 in inter-day trading on 24 December 2014 SCG subsequently dropped to $3.465 on Tuesday 6 January 2015 before closing at $3.49. The continued price drop stood out because unlike most of the other A-REIT's, SCG did not go "Ex-div" on 29 December 2014. If SCG follows the past dividend process of WRT it will likely go ex-div early in February and pay the dividend late in February. Accordingly there is still a $0.102 dividend included in the share price.

Additionally some of the stronger A-REIT shares (like gpt) that did go exidiv on 29 December 2014, dipped after going ex-div then quickly rebounded. Even Dexus, which dropped to as low as $6.97 after going ex-div, rebounded yestererday to $7.21+ inter-day.




While SCG managed to jump $0.09 yesterday it is still trading down from the December 2014 highs. I will be looking today to see if SCG can improve on yesterdays close of $3.58. As always do your own research and good luck.

 

[nulla nulla]

Not only did SCG improve on the $3.58 close of 7 January but it managed to improve further over the last week while the All-ords and the rest of the A-REIT Sector shares were falling.





Seems that the share price is not only carrying the $0.10 div but may have picked up a little "irrational exuberance" as well. It probably still has another two or three weeks before it goes ex-div. As always do your own research and good luck.

 

[nulla nulla]

I can't work out whether SCG fell because of Joe Hockey's focus on Tax changes and scrutiny of Superfunds or whether it was related to the SCG Financial Reports released or just that SCG got caught up in the over-all A-REIT sell down?




Volumes on todays' sell down appeared thinner than the volumes on the subsequent resurgence. Maybe there is hope yet? Good luck.

 

[Miner]

folks
Could some one please advise if SCG is still attractive compared to WFD ?
I am a bit confused to understand as SCG and WFD have similar board / Lowey , SCG owns WFD , market capitalisation of SCG is much more than WFD, both are having competing business but performance wise they are not same.
What am I missing here ?
Do not hold any one but MF Motley Fool is heavily barracking for WFD and silent about SCG.
Thanks in advance