Sakae - a undervalue stock

 
  DISCLAIMER APPLIES.

All forms of investment and trading involve substantial risk and there is always the potential for loss. Always invest or trade only genuine “risk” funds. If you do not have the extra capital that you can afford to lose, you should not invest or trade in the market. No “safe” trading system has ever been devised, and no one can guarantee profits or freedom from loss.

COUNTER NAME 
SAKAE HOLDINGS

SGX ANNOUNCMENT

EGM approved on 7 Jan 2011. EGM notice on 22 Dec 2010.

www.sgx.com/wps/portal/marketpla ... ouncements

LATEST NEWS

BT 25 Jan 2010

DTZ has announced that the freehold North Bridge Commercial Complex, located along North Bridge Road, is up for sale, with an expected price tag of S$110 million to S$115 million.

Zoned for commercial use, the site has a total area of 1,079.1 sq m and a maximum gross floor area (GFA) of 4,532.2 sq m, with a gross plot ratio of 4.2.

Based on sale price expectations, this translates into a psf ppr cost of S$2,225 to S$2,357.

The plot has a buildable height of up to six storeys, said DTZ. It currently houses a six-storey commercial block with an existing GFA of 6,188.67 sq m.

Shaun Poh, Senior Director for Investment Advisory Services and Auction at DTZ, said, “There has been no similar property offering in the vicinity recently and we expect the property to attract keen interest from investors and developers.”

With the plot’s central location, along with its prominent frontage and proximity to the Bugis and City Hall MRT stations, the property has the potential to be restored into a boutique office, said Mr. Poh, adding that it can also be converted into a retail development.

“Shop units at The Bencoolen have recently changed hands at S$3,500 to S$5,300 psf and at Sim Lim Square up to S$9,000 psf,” he said. Other possible development options for the site include a hotel, which is subject to planning approval, he added.

The tender for the site will close on March 3.

THIS POTENTIAL CAPITAL GAIN IS FOR:

A. People who have mid-long term investment horizon NOT for short term traders   

B. People who believes in value investment NOT for pure technical analysis traders. Due to the low trading volume - Candle stick price action and trend will show conflicting signals   

Technical Analysis will show WHEN THE BIG BOYS bull-IN. This is a trade before that...   

POTENTIAL RISK

A. Low trading volume and not under any "big boys radar"
B. No analyst coverage.

POTENTIAL GAIN

Trading range: 0.20 - 0.24

Scenarios A
North Bridge Sold at Not sold
Net Profit 4,120,000
EPS 0.03
Historical PE 8.7
Target Price 0.24
MOS (50% margin of safety) 0.12


Scenarios B
North Bridge Sold at 70,000,000
Net Profit 8,200,000
EPS 0.05
Historical PE 8.7
Target Price 0.47
MOS (50% margin of safety) 0.24

Scenarios C
North Bridge Sold at 100,000,000
Net Profit 14,680,000
EPS 0.10
Historical PE 8.7
Target Price 0.84
MOS (50% margin of safety) 0.42

Scenarios D
North Bridge Sold at 110,000,000
Net Profit 16,840,000
EPS 0.11
Historical PE 8.7
Target Price 0.97
MOS (50% margin of safety) 0.48

Scenarios E
North Bridge Sold at 115,000,000
Net Profit 17,920,000
EPS 0.12
Historical PE 8.7
Target Price 1.03
MOS (50% margin of safety) 0.51


SCENARIOS

A. Unlikely to happen. ERC just bought Prime Centre at 103million. They are keen to dispose the North Bridge complex.
B. Unlikely to happen. According to info, they already have a 100 million offer.
C. Unlikely to happen. According to info, they already have a 100 million offer.
D. Likely to happen. Or between C-D.
E. Best case scenario


ASSUMPTIONS

1. Full year profit is based on double of H1 2010 profit.
2. Profit assumption is based on various scenarios property is sold. Profit is estimated.
3. Target price is based on assumption profit is reinvested to generate further earnings. Obviously, there are many more possibilities which are not considered.
4. 50% MOS on price as property gain is one off gain which is not likely to be repeated.
5. No rental income from HQ assumed.
6. No revaluation from HQ building. DISCLAIMER APPLIES.

All forms of investment and trading involve substantial risk and there is always the potential for loss. Always invest or trade only genuine “risk” funds. If you do not have the extra capital that you can afford to lose, you should not invest or trade in the market. No “safe” trading system has ever been devised, and no one can guarantee profits or freedom from loss.