2nd Liner Prop Stocks

KSH Holding announce a placement of share at $0.4080

Wonder what is their plan for this money... do they really need this money taking into consideration that it is placed out at significant discount to RNAV.

erelation, the placement price was at a premium to book value ....and so far, KSH has used S$1.9m to increase its stake
in its Beijing condominium project (Liang Jing Ming Ju, Phase 4) from 26.2% to 45.0%.

There is a nice upside for KSH.

I read that OCBC values the stock at 61 cents based on the construction segment at 4x FY13E earnings and a 40% discount to RNAV for the property segment.

Hi Joe,

You might be right.... i just don't like the fact that the company is low on gearing and decide to raise fund through share placement which is significant lower than RNAV, although it is above book value. Is the book value current or based on historial figures?

I guess there is only 2 reasons why the company do a placement.

1) The management believe that the current share price is overvalued.

2) The managament believe that there are good opportunity to deploy the funds to generate higher return as compare to the cost of equity.

In KSH case, it appears that they have deploy the fund pretty quickly although it is a small part of the fund raised. Good point is that it includes treasury shares that the management have brought earlier at below $0.30.

While i have also noted that there has been company share buyback BUT there isn't any directors/insider buying of company shares over the past 12 months... as compare to Lian Beng, ChipEngSeng...

All the best for those who are holding....

Cheers
Yee

Good piece on the property trend and how to read statistics the right way by Philip Loh. This appeared in ST Forum.


THE Singapore Real Estate Exchange (SRX) reported that resale suburban condominium prices rose by 5.1 per cent last month ("Resale suburban condo prices rise"; March 9).

This gave the impression that suburban property prices had gone up by 5.1 per cent when, in actual fact, prices may have softened a bit from January.

The SRX reports average per square foot (psf) figures, which depend a lot on the mix of properties transacted.

As the sales volume plunged for the general resale market (older private properties), the sub-sales of private properties that were still under construction, about to get their temporary occupation permit (TOP), or just received their TOP (new properties) will pull the average psf price up.

Also, the sizes of these sub-sales units are usually smaller, which will generally fetch higher psf prices.

The mix of private properties transacted is simply getting newer and smaller. Even if real actual prices were to remain the same, the SRX would still have reported higher average psf prices as long as the mix of transacted units was skewed towards the "newer" and "smaller" trend.

The more balanced Urban Redevelopment Authority (URA) private property index reported a price gain of 2.8 per cent last year, down from the 5.9 per cent gain the year before ("Prices of suburban condo units climb 3.4% on strong demand"; Jan 3).

The difference is that the URA index adjusts for the size and age of private properties transacted, whereas the SRX does not.

As the Housing Board does not build shoebox flats, and new flats can be sold on the resale market only after the five-year minimum occupation period, the SRX actually reported a drop in last month's HDB resale prices.

Sales volume was reported to have dropped sharply last month and developers' share prices plummeted as a result of the poor outlook.

All these, I believe, are more indicative of the true state of the Singapore property market now.

The SRX's reported average psf price is a misleading indicator of the health and price trend of the Singapore property market. As a result, many Singaporeans may feel that the Government's property cooling measures are ineffective when, in actual fact, they could be working very well.

Philip Loh Chin Hwee

HEETON is really worth putting on your radar screen. There is a good post on it.

'fundtech' Posted: Tue Apr 23, 2013 10:00 pm at Shareowl.com:

Heeton's 50% stake in Sun Plaza is still held at a very conservative price of $1642psf of net leasable area. It seems the company has not revalued its Sun Plaza stake. Reading through their Annual Reports, from 2007 to 2009 Sun Plaza was valued at $225m, from 2010 to 2012 it is still valued at only $250m.

Meanwhile Northpoint Shopping Center, which serves a larger population and has been refurbished and expanded by Frasers CentrePoint Trust, has seen its valuation rise steadily to $570m in Year 2012 or $2427psf. (Valuation of Northpoint increased every year $286m, $318m, $503, $533m, $570m from Years 2008 to 2012 respectively). Causeway Point's valuation has also been rising consecutively for last 5 years, now at $2140psf.

In 2011, Heeton and Koh Brothers decided not to sell Sun Plaza after conducting a tender exercise in 2010 via CB Richard Ellis, although there were supposed parties interested to buy Sun Plaza at greater than $2000psf. I think it's time that the company seriously consider unlocking value in this asset again.

The value of Sun Plaza is approximately equal to the entire market capitalization of Heeton, a sale at > $2000psf would unlock a huge amount of cash for shareholders and would cause the NAV/share to rise to ~ $1.45. If we factor in profits from its condo units that are already sold, the NAV could be near to $2 per share in few years time.

AmFraser Research analyst -- Sarah Wong -- today.

· Growing asset values. Sing Holdings boasts of potential strong growth in book values over the next three years. We estimate sales of current and future development projects to propel Sing Holdings’ book value per share to S$0.95 by FY2015. Its current book value stands at S$0.63, a figure still significantly higher than Sing Holdings’ current share price of a mere S$0.415.

· Strongly undervalued; Maintain BUY with FV of S$0.56. We maintain that Sing Holdings presents deep value as a niche developer, and investors stand to gain exposure into a growing NAV story Sing Holdings presents.

Trading at only 0.65x P/B and at a steep discount of more than 55% to our RNAV estimate of S$0.93, we believe there is minimal downside risks to Sing Holdings. Sing Holdings remains our choice pick for a value play—maintain BUY with an unchanged fair value of S$0.56 based on 40% discount to RNAV. BUY.