Paul , good luck to yr Hupsteel investment. I will join you after I do more homework. I am reminded of Sing Holdings. It was 34 cents about a year ago, as it had been for about 2 years before that.
SING HOLDINGS: Stock Price Is No Reason For Shareholders To Sing
Nothing major has happened among the basket of prop stocks I like. But here are some minor points on the 10 counters:
1. Roxy has seen insider buying, which probably accounts for most part of the recent rally. Co is starting to look outside Singapore as developers get crowded out of the Singapore market – a right move, IMO. I continue to like the management (active, sharp, good in execution) but the stock’s discount to RNAV is not very steep now after the recent rally. I reckon RNAV of 90ct-$1, with bulk of it being from its hotel.
2. Pollux’s latest annual report shows that Fragrance’s Koh Wee Meng is now a top 20 shareholders. He probably sees Pollux as a company similar to his own – selling small units, small projects. Co is developing its Ganges Avenue site into a serviced suites, perhaps to retain it for recurrent income. Coming AGM being held at Mandarin Orchard seems to be a tad lavish, but it could be how the company wants to project itself. My RNAV estimate is about 19-20ct.
3. Heeton’s stock price strength should be supported by its impending trading of cum bonus and bonus warrant. The company’s stakes in KAP, Newest, Sky Green and Boutiq – all of which sold very well – should mean that earnings visibility is solid for the next 3 years. The EPS from these projects are also very good. Next catalyst: launch of Seletar Garden site. With RNAV neatly above $2 per share, it has both assets and earnings stories. And it will soon be the only developer stock with a warrant. Will it be a target for “frying” by stock market players?
4. Hiap Hoe’s recent rise was sweet, despite management’s inability to buy land for new projects. In fact, the company has been lacking in activities since its last land purchase years ago. However, it does sit on RNAV of above $1.50, and has a piece of land at Kallang Pudding which it is developing now (but which is not launched yet; once again showing that management tends to “build first” rather than “sell first” – which is a sharp contrast to Roxy management’s operandi modus). With the industrial prop market showing signs of stagnation, there is a risk that HH could end up seeing its assets trapped in another property.
5. Superbowl: no action here, but its underlying assets are in the right sector – mainly shop spaces. RNAV of above $1.20 should support the stock price, but company lacks catalysts, like Hiap Hoe. Having said that, both HH and SB may suddenly spring to life should the major shareholders (who own more than 70% in each of them) attempt to privatise them. For those reasons, I continue to own both stocks.
6. Chip Eng Seng’s next catalyst should be its Yishun commercial and residential project, slated for launch this year. If this does as well as CES’ Alexandra project, it should prop the share price up. Co’s Aussie website (google CEL Australia) indicates very briefly its 2 outstanding projects Down Under, the major one of course being the 1,000 unit Victoria Street project in Melbourne, which could be another commanding tower in the city. Management is still actively bidding for land but is not willing to overpay. My RNAV estimate: above $1.50.
7. KSH: refer to Heeton as it has interest in similar projects. Co’s earnings visibility is also good for next 3 years. But RNAV of slightly above $1 makes it less attractive than Heeton.
8. Ho Bee is one of the 2 mid cap prop stocks that I still own, mainly for the potential revaluation surplus from Metropolis. It’s also venturing overseas – a right move at the moment. RNAV is around $3-3.50.
9. HPL is the other mid cap prop stock I like, mainly because I treat my investment in it as a proxy to buying a few sq ft of land in Orchard Road. I believe that among listed companies, it’s the one which owns the biggest developable land in Orchard. Also, I believe the hotels it owns overseas are undervalued in its books. My own estimate of its RNAV is $5-$6.
10. LKH has its PL Square story intact. The retail space is waiting to be monetized, and profits from its office units are not booked yet. Earnings visibility is also good. RNAV is around $1.10-1.20.
Macro-wise, however, the physical property market is heading towards the completion galore years of 2014-16. If US interest rates do go up from end-2013 onwards, talked about recently, then the double whammy of higher rates and big completion numbers may lead finally to a meaningful price correction in the physical market.
Nevertheless, because prop stocks are now not crazily played up unlike 2007/8, and because developers have already sold much of their stock and in fact lacking land holding, the impact of any property slowdown may not be that drastic. Of course, that’s only one view, and only time will tell if it turns out to be a right one.
Last edit: 11 years 3 months ago by sumer. Reason: Wrong site name
Hi abb, Sorry for privacy reasons I am not able to review my %.Also, I do adjust my % up and down following rises/falls in each stock's price, so the % can be volatile.
As a guide though, I would say my bigger holdings are in (not in order): Heeton, KSH, HH & SB, CES, Pollux and Roxy.
Apart from Singapore RNAV stocks I also own stocks in other sectors, though they form a much smaller %.
At the same time, about 10-15% of my portfolio is in KLSE stocks - made up of Iskandar theme plays like Sunway wrt, Mah Sing wrt, Tropicana Wrt, etc. These have chalked up about 100% rises since I bought in around Nov-Dec 2012. I have reduced some accordingly, but am still bullish about the Iskandar theme.
Here are some updates on the prop stocks that I track:
1. Hiap Hoe: At last, some action at HH. I view its purchase of a stake in Ley Choon as neutral, as I am not familiar with the latter’s business. It’s an earnings story, a small investment, and something not very relevant to HH, IMO. However, its second deal – that of a piece of land in Melbourne that already has plans drawn up for 2 towers (one is 43-storey high), 425 apartments and 452 parking lots – is a much larger deal and hence, more exciting.
HH paid S$28.8m for the site, but the GDV is likely to be well over A$200m, assuming just A$500k per apartment unit. HH, however, may redraw the towers and incorporate a serviced apt/hotel component.
If you google earth, you will see that the site is well situated, with quite unblocked views, and near to the CBD.
While HH may be a tad late in the Melbourne apartment game, the company has no choice but to venture overseas as the competition for land in Singapore is just too stiff. Being a value-buy developer, it must have decided that it’s safer to buy a piece of land in Melbourne than in Singapore at the moment. After all, what can S$33m buy you over here? A GCB plot for one house?
HH has joined CES in venturing into Melbourne. But until HH shows that it rewards its minority shareholders better with reasonable dividend payouts, and until it shows that it can sell its properties well ahead of completing them, I personally like CES more at the moment. Nevertheless, both counters are in my bag for the same main reason – deep discounts to RNAV with earnings visibility to boot.
Meanwhile, HH has recently sold quite a few units at Skyline 360, and has offered $150k renovation packages to push sales of unsold units at Skyline, Treasure and Signature at Lewis. This is a positive move, and shows management’s response to a slower higher-end market.
Also off the radar is the on-going pre-trial hearings between HH’s majority shareholders’ family members, which apparently means the feud is not settled yet. The last such hearings were held just last week.
2. Heeton: I just learned of 2 recent developments that are significant. Firstly, the company is apparently closing Sun Plaza for major renovations. I hope this entails adding some net leasable space to the old shopping centre, which is so conveniently located next to the Sembawang MRT station. Could the company be priming the building for a sale after all? Heeton has a 50% stake in the shopping centre.
Secondly, El Centro is apparently now slated for pulling down by 1H next year, and a new building will be put up. It seems that a showroom is now being set up. If Heeton sells the shop and apartment units here, the profits could be very substantial as the book value of the present building, I suspect, is very low. If the co can sell the freehold project (including shops) at an average of $3,000 psf, a gross profit of about $70m is possible, depending on assumptions. That translates to gross profit of over 30ct per share.
3. Pollux: Company confirms that it is keeping Ganges Centre for income, after it is A&A-ed into a serviced apartment. The A&A ($12m) will save the company some money (vs tearing building down). Perhaps Pollux is treating this as an interim move, in view of the site’s present plot ratio of only 2.1, in a prime area where all the HDB flats are already built on higher plot ratios. Site is also near the future Great World City MRT station.
4. KSH: UOBKH has initiated a report on the company, the second broking house to do so. I was impressed with KSH’s boss at the recent AGM and I believe the company is in good hands. He is rather investor friendly, and seems like someone who will look after small investors’ welfare well.
UOBKH’s report has shed much light on its China projects, which I believe will be very profitable. The co will also be launching almost all its remainder 5 JV projects in Singapore over the next 6 months. Good sales here will provide the catalysts for future price movements.
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, the company bought back a total of 530lots over the last 2 days.
