Hiap Hoe

Just to offer a possible reason on why Hiap Hoe is paying such a low dividend but yet is buying back shares.
Hiap Hoe's free float is only about 30% and has about $36mil in cash as of Dec 2011. At current price of 40.5c, Hiap Hoe just needs around $51mil to buy all the shares held by minority shareholders.
I'm not suggesting privatization is imminent, but the management is obviously keeping its options open, considering the currently huge discount to RNAV. The Teo family already has Superbowl as a listed vehicle and probably can afford to delist Hiap Hoe even if a 20-30% premium is paid.

Hiap Hoe HiapHoe Share Buybacks
For its 2008's Share BuyBack Mandate, it bought back a total of 1.453m shares at cost of $157,955 or at ave of $0.1087 per share only.
For the 2009's Share Buyback mandate: - NO shares buyback was conducted.
For the above two periods, companies were facing a credit crunch and some were having difficulties obtaining favourable refinancings, so it is understandable that Hiap Hoe was not very aggressive in their Share Buybacks despite share prices being much lower back then.
Under its latest 2010 Buyback Mandate (valid from Apr2010 till up coming AGM next month),
it had so far conducted 8 Buybacks (from Aug2010 to 22-Mar2011) at prices ranging from 38.5c to a high of 41.5c, all in, it bought a total of 1.429m shares costing $575,730 or at average of 40.29c per share.
As those among us who are following developments at Hiap Hoe will be well aware, it latest Book NAV (at 31-Dec2010) is $0.4381 per share BUT more importantly its RNAV is easily worth some $1.00 per share coz of outstanding recognitions from a few very fat margins ppty projects (their landcost are among the lowest within the industry).
If surplus for its Balestier hotel (landcost only $172 psfppr) are included HiapHoe's RNAV will hit $1.20 per share. (if they proceed to sell one, of the two hotels, at least some part of the surplus will get crystallised)
Thus in this regard, it makes alot of sense for Hiap Hoe to do share buybacks, and I hope they will do it even more aggressively going forward.
==> coz for every share BuyBack at around 40c, the Group's RNAVs will actually improve by some 60c-80c (gain by 150% to 200%)
===> that's much better than tendering for any piece of land now, NO WAY you can make this type of margins/returns so easily with current high land prices !!
Risks of kenna Privatised Cheaply
Fortunately, Hiap Hoe's current shareholders base is quite large, some 3700 shareholders as at Mar2010, so threat of forced Delisting due to failure to "meet minimum number of shareholders" is NOT an issue for now.
However as minorities, its also v. important that minorities shareholders collectively, have much more than 10% voting rights and so can avoid a Mandatory takeover and delisted too cheaply.
Some of my past holdings that have met with this fate are: Prima, Furama Hotels and EngWah. Note that the Goh family buyout the 5 cinemas/office properties for $99.48m specifically Toa Payoh Entertainment Centre (with 61 yrs lease remaining) was buyout for only $28.7m
Last week, Toa Payoh Entertainment Centre (now left only 58yrs lease) got resold to Hersing for a cool $66m.

Hi Fun$ and Starbugs,
 
Good to have more people looking at this counter. There is hardly any analyst coverage for this stock, mainly because it's very small cap and its shares are rather tightly held. A non-stockbroker related site - Singwealth.com - actually covered this counter in Jan 2011. The figures there look very much the same as what Fun$ and myself have calculated, the differences being due to the assumptions of the value of the hotels, selling prices of its projects, etc.
 
Yes, there is a danger of Hiap Hoe being taken private at a low price. I am also wary of that, as it does not cost much in such an exercise, since it's already about 70% owned by the major shareholder. However, as my cost price is below current market price, and I am still adding the stock on each pullback below 40ct, I don't think any privatization is bad for me. In any case, I do not intend to sell out unless the price is reasonable. Right now, any price below 60ct is a no-go for me. Also, a quick and opportunisitic privatization attempt does not usually go hand in hand with share buybacks (you would want a sudden, stealth approach instead) - so, perhaps one is not in the works for now.
 
Meanwhile, the major shareholder of Hiap Hoe also holds a 70% stake in Superbowl. I also own this counter, and I see this as a more likely privatization candidate as its market cap is even smaller, and hence cost even less to be delisted. Superbowl's RNAV, because of its stake in the Zhongshan hotel/commercial project, is also rather high, in the region of 50-60cts, depending on what value one gives to the Zhongshan project upon completion. A merger between Hiap Hoe and Superbowl is also a possibility since both are basically doing mostly the same kind of biz, and The Beverly, Zhongshan Park and Treasure at Balmoral are all Hiap Hoe-Superbowl joint ventures.
 
I attended Hiap Hoe's AGM last year and have not gotten an impression that its major shareholder will take advantage of the company's small shareholders, although one never knows, as money does make people skip a step or two in their climb up the ladder of wealth. As small shareholders, it's hard to beat the insiders and major shareholders in their game; that's just the nature of the stock investing world. The trick is to do what you can, but after that, don't cling on to the outcome but let it go, and make the next move in the stock market - there is always another undervalued stock out there for you to have a new crush on.
 
 
 

ROXY-PACIFIC: Why the stock price is resilient
Hiap Hoe is awesome but don't ignore Roxy - it has massive revenue to recognize & a slew of commercial projects for launch over the next few mths.

Hi Del,
 
I agree Roxy is a good counter too; in fact, it's one of few 2nd liner prop stocks that I own; others are Hiap Hoe, Heeton, Superbowl, Tuan Sing, Chip Eng Seng and Tee Intl. Among bigger cap developers, I like Ho Bee, Bt Sembawang and OUE at current prices. Other non-Singapore prop-related stocks I like are Gallant and St Land.
 
For Roxy, other than its good fundamentals (RNAV, earnings, etc), I like its management's ability to sell its condo units quickly. Quick turn overs allow management to refocus its time and energy on new sites and projects, and lead to higher turnover over the longer term as projects are sold quickly and money received from sales is ploughed back into buying new land for development. Roxy's management has got its marketing strategy right (aggressive, decisive), and in this area, in fact, I like it more than Hiap Hoe's.
 
Apart from that, it's interesting to look at the shareholder list in Roxy's 2010 annual report just out. Among the top 20 shareholders are Fragrance Group, Sing Heng Chan Investments (shrewd long term investor) and Kim Seng Holdings (google Kim Seng, Ezra).
 
 

Sumer,
some more that $1072 psfppr for that Robinson Rd hotel site  is ONLY for 60-years lease 
Hiap Hoe's $172 psfppr  is for a full 99-years lease  !!
Toa Payoh Entertainment Centre at Lor 6, Toa Payoh,
 is actually pretty close to HiapHoe's Balestier hotel site (only separated by the PIE ! )
it's v. small site,  landarea=14,988 sqft only, GFA=44,266 sqft
so Hersing pricetage of $66m = $1491 psfGFA  and it got only  58-yrs lease remaining !!
Superboring, super-illiquid & also super-undervalued
except for one in their midst, the neighbourhoods all gunning for some actions...
BT: 2011-Mar-16: PoMo=Lend Lease, partner selling PoMo at Selegie for $255m,
=> GFA=234,996, NLA=182,060 or $1226 psfGFA or $1582 psfnla

BT: 2011-Feb-10: (Peace Centre+Peace Mansion) Peace Centre complex is up for en bloc sale again, asking for $700m
=> that's $1355 psfppr (incl $150m for DP)

BT: 2010-Aug-18: Selegie Centre site up for tender with an indicative price tag of $110 to $125 million
[hr]
[sumer 06-01-2011]:

Today's news that the hotel site at Ogilvy Centre, Robinson Road, has been sold for $1,072 psf ppr highlights how land prices for hotels have surged over the past year, and allows us to dig up and recall how some companies which bought such land earlier are sitting on pots of gold.
 
One example is Hiap Hoe/Superbowl. Their joint venture clinched its big hotel site at Ah Hood Road (Zhongshan Park) for a pittance in comparison, deep in the liquidity crisis of 2008, when no one dares to bid for any land.
 
Here's a report from the press at that time:
"The winning bid from HH Properties, a joint-venture between Hiap Hoe and sister company SuperBowl Holdings, was S$73.3 million or S$172.09 per square foot per plot ratio – significantly below the S$350-S$470 psf ppr that analysts indicated for the site when it was launched in late March."
Hiap Hoe and Superbowl paid a mere $73.3m for the huge site which it is now constructing nearly 1,000 hotel rooms, an office block and a shopping centre! The price of $1,072 psf ppr paid by the winner at Ogilvy Centre is 6.3 times the price paid for by Hiap Hoe and Superbowl! And that site can build 200 hotel rooms compared to 1,000 at Hiap Hoe/Superbowl's site.
By my estimate, Hiap Hoe and Superbowl are comfortably sitting on a $200m paper profit on its Zhongshan Park site. For Hiap Hoe, its 50% share works out to about 21 cts of "unrealised" profit per share, while for Superbowl, it's even higher, at about 30.7 cts per share!