2nd Liner Prop Stocks

Hi Peter123, attach below acticale by Sumer. The sucess of Alexandre projects will increased CES value further.
 
Below is post by Sumer in: Subject :Re:Guess which SG developer plans to build this Down Under?.. 27-12.2012
 
I could not get the last msg posted properly. Hope this one breaks it into paragraphs:
Since I last wrote on CES, the stock has outperformed most prop stocks, due mainly to the consistent and aggressive share buybacks.
Perhaps the company finds value in its own shares for the following reasons:
1. Tower Melbourne - Green light has been obtained. This project could potentially yield big profit figures for CES, for the following reasons:
a. For a piece of land that is only 9,827 sq ft, CES is building a structure that has about 380,000 sq ft of net gross floor area (which can be sold). This means a plot ratio of nearly 40 times - a feat not achievable in Singapore.
b. The best thing is that the big plot ratio seems to be "free". It costs CES only A$25.5m to purchase the land, while the potential sales proceeds from the 571 apt units could be as high as A$304 million (based on A$800 psf X 380,000 sq ft).
c. Total cost of the project could be A$170m or higher, depending on what one's assumption is. One Aussie news site mentioned this "cost" figure, without specifying if the A$170m includes land and marketing/other costs. Even if one assumes A$200m total cost, the gross profit margin is A$104 million, which net of 30% tax rate, will mean A$72.8 million, or about S$91.73 million, or 14ct per share! Of course, if A$170m is indeed the total cost, then EPS will rise to 18ct.
2. 100 Pasir Panjang - The launch of this industrial project recently is a pleasant surprise, as I had expected a later date. Net saleable space is 125,596 sq ft, selling price is $1,000-1,200 psf. With land cost of $463 psf, and assuming total cost of $663 psf, I expect about $48m gross profit based on $1,050 ASP. I hear that about 30% of the units are taken up in a short 1-2 weeks.
3. Alexandra hotel shops - The NSA (net saleable area) is much smaller than earlier indicated (though the earlier figure is probably just GFA). Based on available info, the NSA is 50,918 sq ft. Assuming ASP of $5,500 psf, that will mean the retail space has a value of $280m. I am not sure if all or only some of the shops will be sold. Shop space sale could be launched next month.
My estimate of the hotel's value is $292.5m, based on $650k per key for its 450 4-star rooms. Total value of this hotel/retail project (taxation not taken into account) = $572 million vs cost of about $350 million. Surplus valuation = 34.2 ct per share.
Meanwhile, My Manhatten is 95% sold since I last wrote.
My personal estimate of CES' RNAV is now about $1.50, which includes all the profits from its condo and HDB projects but excludes its construction business as its contribution is marginal.

Someone recently said that newspaper reporters are not doing enough investigative work on corporate developments, and the case of CES was highlighted as an example (although not from a positive angle).
I guess it is precisely because analysts and reporters are not digging up enough information that it allows us retail investors to do our own homework and unearth our little gems. Googling, making phone calls to agents, viewing showflats, asking questions at AGMs, etc, are some of the homework we can do to stay ahead of the analysts, reporters and bigger boys. Here, I hope I have shared with you what info I have found on a little gem called Chip Eng Seng.

Hi all,
Re CES, Tan Yong Keng is the founder of Kenyon and seems to be a shrewd man. You can google and read about him. He has been accumulating CES shares under Kim Eng Securities (custodian), Kenyon (his co), his wife, his father, his son and his sister, as indicated in SGX reports as deemed interest (not sure if they are buying separately for themselves, as that would also be "deemed interest").
My estimate of CES' RNAV was raised to $1.60-1.70 after it clinched the Yishun site. I understand 100PP is now more than 50% sold.
Re Superbowl, I have not looked into how much profit or loss could be made in Days Hotel's first few months of ops. It is possible that there could be a loss due to start-up costs and lower occupancy rates. However, I bought SB for its underlying asset value rather than profits, and hence I think the profit or loss due do Days Hotel's opening is not significant and probably have only short term effect.
Re Bonvest, I find it hard to give values to its assets because it lumped all its hotel components together, and the co does have overseas hotels (whose values I do not know how to estimate). But it's safe to estimate that the company's RNAV is above $2 at least, and perhaps even close to $2.50. I had held only a small quantity of Bonvest which I have since disposed of, in favor of companies which I can better analyse.
Observing the charts and buying/selling patterns, I detect accumulation at Hiap Hoe (although I am not sure who is buying or if the buyer is strong). SB is probably a follower.
CES chart looks a bit stretched, so I have taken some profit but keeping the bulk of my holding because of the interesting angle of possible hostile bid for the company. CES is the rare 2nd liner property company where the major shareholders does not have a tight hold of its shares (less than 50%) so it's vulnerable.
Someone seems keen on stopping KSH from rising (usually this is not successful if the fundies are intact. eg, I detected the same when CES was below 50ct).
Just my observation and views about possible buying/selling patterns.
 

Sumer,
Thanks for all your posts. Was thinking of selling off CES around 50 cts but when I came upon your posts, changed my mind. Thanks!
Firm believer in looking for below RNAV stocks, The bigger the discount the better, though some can still be duds! Was thinking it would be helpful if you could list the 2nd liner property stocks with your assessment of RNAV so that we dont have to search through the various posts. Can? Thanks.

KSH announced last evening that 9M net profit surged 103% to $22.7m. EPS was a good 6.08ct. If full year EPS hits 8cts, PE would be a low 5.1X. NAV is nearly 40ct, but with lots of future earnings coming, my take is RNAV of $1-$1.10. Immediate catalysts are listing of TEE's prop subsidiary (whose bulk of land is same as KSH's) and launch of HL Garden.
Outsig, I will try to get a table on the RNAV of various prop stocks after the CNY as I will be in Iskandar today.
 

Below is a quick list of prop stocks I own/have owned or monitored. Note that RNAVs are subject to changes as new developments in a company or the prop market surface; so it's not a fixed figure. These RNAVs are only my personal (and adequately prudent, I believe) estimates based on certain assumptions. To me, (1) estimating RNAV as well as (2) attributing a certain discount to a stock's RNAV are both more of an art than science; so differences between my figures and others' are to be expected.
Also note that share prices are a function of demand and supply for a co's shares, and demand and supply can be due to several reasons, of which a company's fundamentals (like RNAV, earnings, etc) is only one of many.


Stock
Share
RNAV
Disc to
Disc to

price

RNAV
RNAV

($)
($)
($)
(%)





Heeton
0.66
1.7
(1.04)
-61%










KSH
0.44
1.05
(0.61)
-58%





Hiap Hoe
0.7
1.6
(0.90)
-56%





Superbowl
0.54
1.2
(0.66)
-55%





CES
0.885
1.6
(0.72)
-45%





Ho Bee
1.9
3
(1.10)
-37%





HPL
3.17
5
(1.83)
-37%





Roxy-Pac
0.61
0.9
(0.29)
-32%




 
Stocks that I had owned previously (may own again):
   
 
 
 
   
While I like the safety of high RNAVs, it does not mean that I pick stocks based solely on "the bigger the discount the better" (so, at the moment, I do not own the stocks listed in the 2nd table, for eg). I take into consideration management's agility and past records, prospects of monetizing of assets, dividend payout, major shareholders' honesty and care for minority shareholders, immediate catalysts, etc. Then, I decide, for eg, that CES can trade up to 70% of RNAV (ie, 30% discount) before I am concerned.
Again, all these personal targets and views are not stationary. If for eg, the govt comes up with yet another set of measures to curb demand for any type of property, then I will have to relook at the maths and adjust the RNAV discount I am comfortable with.
As stock prices rise, don't forget to take some money off the table; prudence is a good habit and being content is a good guard against greed.

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Admin says:
The forum platform has moved to a new one, resulting in formatting issues as can be seen above for the table that Sumer provided. Thankfully, the above text & table are available in : www.nextinsight.net/index.php/story-arch...s-of-property-stocks

Dear Rock, Sumer
Thank you for the info provided? Why do you think TYK is buying up so much of CES stocks? Could it be a takeover? Would fair value of CES now be $1.60?