2nd Liner Prop Stocks

Having attended Bonvests' and Hotel Grand Central AGMs these 2 days, to gauge for myself how the major owners/mgt are like, here's my view:

1. I am not excited with the Bonvests team. Answers given by the board were short, with mostly "Noted" being used to answer shareholders' queries and suggestions. Mgt indicated no interest in redeveloping Liat Towers nor giving an indicative value in its annual report on the value of Sheraton Towers. Hence, I am not keen to follow up on the counter.

Nevertheless, the undervaluation in its assets remain. Perhaps patience may still pay off for those who own the stock, but I will pass on this one.

2. HGC's board is a direct opposite, a rather happy lot sharing info with shareholders generously.

The 2 Orchard Road hotels should TOP next year, and with 752 rooms in total, any post-TOP valuation of these assets will add to its NTA. I suspect a 50ct surplus could be in order. It would even be better if mgt is open to sale of the leasehold hotel while keeping the FH one, as that will mean a cash inflow that could be distributed out as dividends.

Nevertheless, as this is a hotel stock, a substantial discount to NAV is a trade mark of its breed.

Mgt's likability will probably keep me interested in this counter, despite a lack of immediate catalysts.

Sumer -- when you say friendly management (of HGC) u mean who? I have never attended their AGM, so am interested to know who you are referring to/

Tan Eng Teong (Executive Chairman/Managing Director)
Tan Teck Lin (Executive Director)
Tan Hwa Lian (Executive Director)
Tan Eng How (Non independent non-Executive Director)
Fang Swee Peng (Independent non-Executive Director)
Chng Beng Siong (Independent non-Executive Director)
Tan Kok Aun (Independent non-Executive Director)

Hi BNN, Sorry I did not take a proper look at the name plates in front of their desks. But I would assume the 2 main speakers were 2 of the 3 Tan brothers: Tan Eng Teong, Teck Lin and Eng How. A woman who spoke, I believe, could be Tan Hwa Lian or Hellen Tan, or Michelle Tan (all are daughters of either one of the 3 brothers).

I believe Anthony Poh, the group accountant, also spoke.

I thought I could Google their pictures later, but apparently it's hard to find them, so I am not too sure who exactly were the ones who spoke. Suffice, perhaps to say, that I had a good impression of all of those who spoke.

I notice HGC has many loyal long-time retail shareholders too, and they appear happy with management, a sign perhaps that they have been well looked after over the years.

For eg, I note that the company has dished out consistently good dividends. Even though earnings were below 3ct per share last year, HGC dished out 5ct dividend, allowing many to take scrip dividend and increase their stake in the company while saving on cash payout. This compares with some listed companies which consistently give the excuse that they "need money for expansion" for not paying better dividend.

Note: I am vested, but not a lot, as it's after all, a hotel stock, and catalysts are few.

Bonvest's BOD may not be in tune with the time as to how to positively engaged with shareholders. Perhaps, they dont need to given the low level of minority shareholdings - sadly, such cockiness or lackadaisical attitude is often seen. Sumer, how old (do you think) is Henry Ngo?.

I will stay vested on Bonvest for a deep value play. Interest in major Spore commercial properties is there and I think this trend will continue given the attractiveness of the nation (asset value in both Sheraton and Liat will likely to appreciate further). Also, tourism is on the upswing in Mauritius and Maldives and this should reflect on its hotel operations there both in asset value and profitability. Its investment in Cordlife should yield positive return.

I will stay the course and bid my time.

Yes, Chairman and his brother, Tan Teck Lin, are unassuming.

Many years ago when HGC decided to invest in Australia and NZ, shareholders were jittery.

HGC subsequently sold its NZ commercial properties for huge gains and bought the land in Little India to build its second hotel in S'pore.

In the recent two years, besides demolishing the flagship hotel in the Orchard Road area to build two new hotels, HGC bought two commercial properties in Australia and NZ with high rental yields.
HGC is now owning 3,008 rooms (not counting the 752 rooms under construction) in 15 hotels and 24,700 sq metres of lettable space in 3 commercial buildings.

HGC is still holding on the site in Christchurch where its hotel was hit by the second earthquake and demolished later. HGC is planning to build a commercial building on he site to house government departments.

Despite all these, gearings are still low -- $152 m loans against $132m cash as at the end of 2013, the result of good financial discipline.

One of me holdings: Heetong.
Sharing waht fundtech shared in another forum:

Discussed at last week's AGM:

i) Residential high end market is very tough now, which is why company is already diversifying to dormitories in Vietnam (bought at very low land cost), Cambodia, China (with KSH), UK hotel. Also, they are exploring other potential new areas which they can't say say for now, will provide updates through SGX at appropriate time.
Onze@TP - many commercial units sold at very good prices, residential moving more slowly.

ii) Sun Plaza undergoing different phases of refurbishment, Phase 1 already over, Phase 2 ongoing now. Phase 3 will be completed by mid-2015. Company has managed to secure many strong anchor tenants at good rental revisions upwards. They estimate the value of Sun Plaza to rise much above SGD300mio from current SGD250mio by next year when completed.
Company also looking at plans for its Tampines Mart and The Woodgroove, but can't specify details now.

iii) > SGD300million of sold residential units with margins of 16-17% expected to contribute progressively over time.

iv) Company is open to suggestions by shareholders of script dividend and another bonus issue. To be reviewed.