Far East Orchard is up 0.5% at $1.92, not reacting much to news it signed an MOU with Australia’s Toga Group to explore an Australian JV to own five hotels and a hotel management business covering around 6,700 rooms across more than 50 hotels.
“It’s still nonbinding. It’s only an MOU and there’s no final prices. We really don’t know what prices they are negotiating,” says Ong Kian Lin, an analyst at Maybank-Kim Eng. “In due course, when the really concrete plans are announced, most likely you’ll see some movement in the share price.”
Concerns over the Australian hospitality business may be an overhang, he adds, noting Singapore companies, such as Ascendas Hospitality Trust, haven’t turned in big success stories there. Another factor restraining gains: “This counter is not very liquid. 60% is still owned by the parent, Far East Organization.” $1.94, the top-end of its recent trading range, will likely cap any further gains.
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