2nd Liner Prop Stocks

CES shares buyback into 5th round. Bruno,or any other forummers, just curious, do u know of any property counters that are operating at net cash position most of the time? Are there such case studies in Singapore or abroad?

Having followed property developer stocks for quite a long time now, I am happy that many of them have performed smartly in 2012.
Perhaps I can recap why I own some of these:
1. Chip Eng Seng - It's my favorite developer stock for now as there are interesting immediate catalysts for the counter. I also like the fact that since its shares are not tightly held like most other small developer stocks, so there is liquidity and perhaps a hostile takeover?
2. Hiap Hoe/Superbowl - I believe Hiap Hoe is in the process of developing its Kallang Pudding industrial site. Also, 5 more units of Skyline 360 were sold after TOP. Treasure at Balmoral show unit is being prepared for launch. No units sold yet.
While I still like both companies for their steep discount to RNAV (my estimates are about $1.50 and $1.20, respectively), both companies need to do more to unlock value.
3. Heeton - Many profitable launches are in the works, including the Hong Leong Gdn site. The big one, of course, is the redevelopment of El Centro at Tg Pagar, which will be highly profitable. Existing tenants in the building are already asked to leave. Assuming a GFA of 60,420 sq ft and ASP of $3,000 psf, I arrive at a sales value of $181m. I believe the book value of the present building plus construction cost for the new one adds up to about $85m, giving Heeton a gross profit of perhaps $96m, or 43ct per share.
On a per share basis, the profits from Heeton's many JVs with the likes of Oxley are much higher than the other JV partners' because of its fewer number of outstanding shares (Heeton: 223m shares, Oxley: nearly 3 billion shares).
On the negative side, Heeton has failed to move units at Lumos and I Liv At Grange. Nevertheless, RNAV of as high $1.60-$2 should provide price support.
4. HPL - I like this one for its compelling story of "the biggest owner of land along Orchard Road". I also like the fact that investors who sell out of SC Global may shift money to HPL, for the same reason Wheelock likes and owns both counters.
5. KSH - Earnings and good dividend payout stories, with RNAV above $1.
6. Amara - laggard among my counters, but company has 2 small parcels of land in River Valley and Newton bought at low prices, which may provide some catalysts. It recently sold more units at Killiney 118, which will probably TOP in Q1 2013.
7. Bonvests - the "hidden" asset in Bonvests could be its prime Sheraton Towers. Interestingly, Sheraton Towers is grouped under "property, plant and equipment". This value is only $247m in its books and may include other overseas hotel assets.
However, Sheraton Towers has 420 rooms. Assuming a value of $1 million per key for this prime freehold hotel, that will conservatively value the hotel at $420m.
Any future redevelopment of Wheelock Place may also involve Bonvests' Liat Towers, mainly because Liat Towers has a big Orchard Road frontage.
8. Roxy-Pacific - I like its management a lot. Discount to RNAV is not as attractive, but management's agility and ability to execute is the main reason I still own this one.
9. SC Global, Bt Sembawang, Ho Bee - 3 stocks which I own that have seen their prices moved up quite a bit. Their stories are already well presented by analysts and the press. I am in the process of reducing/switching out.
While I suspect that physical property prices may decline, at last, in late 2013, I am not sure whether property stock prices will move in tandem or in the opposite direction.
It's interesting to note that Kim Eng Securities has 2 talks in Jan/Feb 2013 titled: "Walk the Talk: Property stock picks for 2013". Kim Eng's stock calls are well followed, so prop stocks highlighted by them could see further upside in prices.
Another potential catalyst could be the entry of some of these developers into Iskandar. Already, Rowsley's share price has jumped due to such a piece of news. Since many developers are unable to replenish land in Singapore because of keen competition, I would not be surprised if some of them start to turn to Iskandar, especially when Temasek and investors like Peter Lim have already started paving the way.
Many Singaporeans are also starting to purchase houses/condos in Iskandar, as Singapore property prices continue to rise to "unaffordable" levels. While security in Johor is still a concern, a removal of this "negative" may lead to a surge in demand from Singaporeans. Then the Singapore developers will have to follow the money.
Today, Rowsley has started the Iskandar ball rolling. Come 2013, perhaps other Singapore developers may join in the party. If so, that may give property developer stocks a new boost in the coming years.
Nothing, of course, is certain.
 
 
 
 

Thanks a million Sumer. I have bought into some of the names you highlighted some time back and of course have reason to smile today.

What do you think of Oxley? I notice it is not on yr list below. I own a lot of Oxley because I am looking forward to TOP of a lot of projects this year and the cashflow will be fantastic. Already, you can see that Oxley is a generous payer of dividends even on its relatively small cashflow. That Ching boss and his sidekick from Hafary seem to be payers of dividends.

Hi Sumer, what do you think I wing tai? The balance seems to be among the strongest, with a decent contribution from retail. Valuation is not demanding when compare to others. I am thinking of accumulating this when the price is better. But interestingly, 1 key executive from wing tai jump ship to chip eng seng, an wingtai boo boo its handing of AGM an does not seems to be retail investor friendly. Other than that, can't seem I find other fault

Thanks Sumer for taking the time to write out your insights.
 
Bruno: Hafary seem to be majority owned by the family, so when dividends are paid out, where do you it goes to ?
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[Bruno 31-12-2012]:

Thanks a million Sumer. I have bought into some of the names you highlighted some time back and of course have reason to smile today.

What do you think of Oxley? I notice it is not on yr list below. I own a lot of Oxley because I am looking forward to TOP of a lot of projects this year and the cashflow will be fantastic. Already, you can see that Oxley is a generous payer of dividends even on its relatively small cashflow. That Ching boss and his sidekick from Hafary seem to be payers of dividends.

Hi Bruno, re Oxley, I tried to look at the counter but was not able to find the "assigned" value of the land parcels bought prior to listing. Hence, I decided to skip this one for now.
Moreover, the company now has 2.9 billion shares, which means that it has to earn lots of profits for it to be amount to anything much in terms of per share basis. For eg, its NAV is now only about 5cts, while EPS for Q1 is only 0.25ct. If HL Gdn can generate a gross profit of $276m, it means that Oxley's 65% share in the project would be $179.4m, or 6.18ct per share. In the case of Heeton, which has a 12.5% stake, its share will be $34.5m, or 15.4ct per share.
Having said that, I notice that Oxley has been quite aggressive in buying land and sells its projects quite fast. I may look at the stock when profits from its earlier projects (of which the land prices are not clear to me) are accounted for. This will allow me to better estimate its RNAV. If someone can share info on his/her own analysis of Oxley, that will be great.
Greenrookie, I did own Wing Tai but has since exited, probably switching to Ho Bee. Company fundamentals look fine. I also did not do my own analysis on Wing Tai as many brokers have ample coverage of the company.