Sumer, thanks for the heads up. It is indeed a big uncertainty and stake at risk is quite substantial.
Let's see how the event evolves.
my speculation is that Chow family is asking for easy money, otherwise they won't wait until this time then shout, and also not doing anything with their approved permit, no selling, no construction... after so many years.
4 cent dividend coming soon. Yield is still great at 77.5 cents share price --> 5.1% yield. Hiap Hoe cannot compare. CES is attractive for its dividends. Just hope the Aussie projects don't spring negative surprises ito currency or local construction issues.
1. Co says dispute with neighbor over TM’s demolition is still on-going. Co seems quite confident that it could be settled, but in a worst case scenario, and the TM project is called off, they would keep the building for rental returns, which I think could be close to 10% gross yield. There may be some investors who are uneasy with this development, but postings on forums over the past few months have already alerted many on this “negative” possibility. Hopefully, this means that the possible setback has somewhat been priced in.
2. Co says plot ratio for Melaka site bought last week is 5.6 (with upwards revision possible). That could give a GFA of 248,344 sf based on a land size of 44,347 sf, and works out to about S$29psf ppr. Although the land is leasehold, the site is sea facing, and very close to Mahkota Parade, Mahkota Mall and Mahkota Medical Centre. Melaka could get a boost from the High Speed Rail, as more tourists from the rest of Malaysia and Singapore will find it easier to visit this historic city, which was designated as a World Heritage site (together with Penang) by Unesco. CES plans for a hotel and apartments on the site. Nearby Hatten Suites apartment units are selling at M$700-800 psf, I believe.
3. Co says it will probably revalue its hotel at Alexandra but book any surplus into Reserve rather than profit. I believe a $800,000 per key value for the hotel is probably fair at the moment. CES does not seem averse to selling the hotel off if an attractive offer surfaces.
4. Sales figures for 2 of its projects have improved: 100PP is about 78% sold while Nine Residences is approaching 75%.
5. CES could launch its Doncaster project in Melbourne this year, but Victoria Street site would be in later years.
For prudence, I would not account for TM profit for now, pending an end to the demolition dispute. Despite this setback, CES is going to TOP 4 projects this year (and these will provide lump sum profits), with the prospect of an EPS of 30ct for FY 2014 remaining intact.
The co is also relatively safe from a deteriorating Singapore property market environment as it has not too many unsold residential units.
Meanwhile, NRA has re-initiated its report on CES. Hopefully this will give the counter a tad more visibility.
CES reported last evening that Q1 net profit was up 3.6 times from $4.7m to $21.6m. Co has booked lump sum profit from 100PP, which TOP in Q1. However, as probably only about 60-65% of the units were sold by end-Q1, more profit will be accrued when further sales are made in future.
100PP profit is also not that substantial as a revaluation of the site previously had already creamed off some of the gains.
EPS was 3.35ct while NAV rose to 81.4ct.
Co expects Belysa to TOP in Q2 and Belvia and Alexandra Central retail space in 2H.
I expect Belysa (40% stake) to earn a gross profit of about $16m, Belvia (100%)$52m and Alexandra retail space about $130m (not including unsold units). All 3 projects' profits are reported lump sum.
A bumper year for CES that hopefully translates into a bumper dividend.
A report early this week in Urban Melbourne website on a possible solution to the Tower Melbourne dispute may be the reason for the relative strength of CES these few days.
Quote:
"Colonial Range Pty Ltd v Victorian Building Authority & Colonial Range Pty Ltd v Building Appeals Board was slated for judgment on April 4th 2014 at the Supreme Court. It's understood Colonial Range was unsuccessful in its case, therefore removing a major obstacle in Tower Melbourne progressing. Whether this eliminates all legal impositions is unclear."
There could be appeals, but is there a risk to the complainant that perhaps they could be sued by CEL Australia (CES subsidiary building TM) for lost profits if they lose the appeal and TM is called off due to deadlines? A peaceful solution where everyone gets going with their respective projects would be a win-win for all parties.
