2nd Liner Prop Stocks

Thanks Sumer. We have lightly edited yr writing, added a picture & a chart to get to >
'SUMER': Property prices to fall but some property stocks still undervalued

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Hi Viviene, Yes I do invest in non-prop stocks, based mainly on "concept" or "ideas" - for eg, I own Midas (based on the idea of China train line boost), Sinogrand (fund playing it up ahead of IPO of its juice biz), TA Corp (not so much RNAV or property but the Koh Wee Seng accumulation angle), TEE (not RNAV but listing of subsidiary and Myanmar angle), Yoma (Myanmar), etc.

But it's my interest in the property market and the relative ease of analysing prop stocks that make me focus on this sector.

For my other stocks, mostly I just read up others' reports and decide if I should follow their calls.

At the moment, though such stocks account for only a small portion of my portfolio as I find prop stocks relatively safe. Things, however, may change.

A BT article today on auctions, mentioned about an auction on 30 Jan involving 3 ground floor units at Parklane Shopping Mall seeking a price of $2,360 psf. A few combined shop units at Bt Timah Plaza is also going under the hammer, with an expected price of $1,500 psf.
 Superbowl owns many retail units at Parklane and some at Bt Timah Plaza. All in, the book value of Superbowl's shops (63,916 sq ft) at Parklane, Bt Timah Plaza, Orchard Tower and Balestier Plaza are valued only at $31.3m in its books, or $490 psf! This means the shops can be revalued up by more than $1,500 psf, or $100 million above book value. That's more than 30ct per share of hidden value.
And this is not even the meat in SB - which is Zhongshan Park of course. A revaluation surplus of 60-80ct per share is quietly hiding here. In other words, the surplus valuation in ZP is already worth much more than the market capital of SB.
 
In ValueBuddies forum, Greengiraffe has smarlty highligted Low Keng Huat. Somehow I missed looking at this stock earlier, but after taking a quick look these couple of days, the company does look interesting. However, its share price has risen quite a bit recently so caution with regards to timing of entry is warranted.
Main points:
1. Paya Lebar Square - office space mostly sold but profit largely not accounted for yet. Retail space is not sold but mostly leased out already. I suspect company intends to sell en bloc to a REIT (hint: Guthrie has 20% stake), hence it is committing to tenancies so its can do its maths on yields. I expect a selling price of $4,000-5,000 psf, lower than prices achieved by CES in Alexandar because CES sold smaller units piecemeal.
2. Exposure to Iskandar - Co owns 3 pieces of land in Johor, 2 of which are rather large (over 6 million and 3 million sq ft, respectively). In fact, one of them had already been progressively built and launched, called Bina Park at Seri Alam. I think only Phase 1 has been marketed. There will be shop/small industrial/residential spaces in Bina Park. This area is probably a 10-15 drive to the 1st link.
It has a smaller plot at Plentong, which is near to Taman Molek, an area that has seen many Japanese moving in to, leading to a surge in prices.
I am still unsure where the 6m sq ft parcel is at, although its probably closer to Kota Tinggi.
3. There was a previous unsuccessful attempt to take the company private. Perhaps another attempt could be in the works, especially since the huge profits at PL Square (about $400 million gross) is not recognized yet.
4. Parkland, its DBSS project, is due to TOP in 2014. No profit is recognized here although sales is a good 90% and gross earnings could be about $80m.
5. Most of the revenue in Minton has been recognized because project is almost completed. Substantial cash, will however, come in this year on TOP.
My estimate of RNAV: about $1.20-1.30.
The planned listing of a huge Iskandar land owner in June this year could be a catalyst for LKH and other Iskandar players. Meanwhile, CapLand is said to be purchasing a huge piece of land at Danga Bay. UOB's Wee Ee Chao is also getting into the action, through a company called Liberty Bridge, buying land at Puteri Harbor recently.
2013 may just see the Iskandar theme being played out.
 

Thank you for your sharing, Sumer. May we know how you calculate the revaluation surplus of Zhongshan Park hotels for Superbowl?

 
Tan Yong Keng has become substantial shareholder of Chip Eng Seng after yesterday pachased of 4.78m shares @ average price of 72 cts bring his holding from 4.76% to 5.4977% yesterday.
Today he purchased another 1.38m shares @ average price of 73.775 cts bring his holding to 5.71%.