Ho Bee issues new shares at S$0.905 each

The largest property developer in Sentosa Island - Ho Bee Investment have issued a new round of share placement at S$0.905 each, totalling 120 million new shares. Ho Bee Investement stands to gain up to S$107.2 million after settlement of placement expenses and the company intends to use these fresh funds to settle outstanding bank loans and for future property developments. Considering that Ho Bee has several new land parcels for developments, this move is likely to provide fresh funds without the need for bank loans. This would increase the gross margin for property developments as the company is not encumbered by higher interest rates.

The issue price of S$0.905 represents a discount of approximately 6.5% to the volume weighted average price (VWAP) of S$0.9679. Thus Ho Bee shares are likely to receive a sell-down in the market for the short term mainly due to EPS dilution and a lower share placement offering.