TEE Land Limited

Short Summary:

TEE Land is a property developer with an established track record in delivering quality and well-designed residential property developments in Singapore. TEE Land property development projects are pre-dominantly freehold in tenure and are targeted at middle-to-high income consumers who value exclusivity in good locations. Whilst the company continue to specialize in residential property developments, it is expanding into commercial and industrial property development projects. Leveraging on the TEE Land experience and expertise in property development in Singapore, the company have also extended their geographical reach to Malaysia, Thailand and Vietnam.

Forecast Dividend Yield:

2012: 0.32%*

2013: No Forecast

*Based on issue price of $0.54, 446,876,000 units after IPO, profit after tax of $1.521 million in 2012 and minimum 50% profit distribution policy.

 

Dividend Policy:

Strength
-Property developer with an established track record.

-Expanding beyond residential property development and have a regional presence in South-East Asia.

-Focus on quality residential property development and expanding into commercial and industrial property development.

-Expanding into new markets

 

Weakness

-Subject to various government policies which regulate the property market in Singapore (Between September 2009 and January 2013, the Singapore government implemented 7 rounds of property curbs and cooling measures to keep the buoyancy of the property market in check)

-May be affected by the political, economic and social conditions in the countries (Malaysia, Thailand and Vietnam) that the company operate in

-Subject to risks associated with debt financing

-Operating in a highly competitive industry in Singapore, restricting the company to offer competitive pricing to buyers

-Subject to fluctuations in the costs of construction materials, labour and equipment. As announced in the Singapore government’s Budget 2013, there will be further increases in foreign workers levies in addition to the increase in levies which was previously announced in the Singapore government’s Budget 2010, Budget 2011 and Budget 2012. In the Singapore government’s Budget 2012, the MOM announced a further 5% cut in the MYE quota for new projects with effect from July 2012. This is in addition to the 15% cut in the MYE quota for new projects with effect from July 2013 as announced in the Singapore government’s Budget 2011 and the reduction in the MYE quota by 25% over three years for the construction sector as announced in the Singapore government’s Budget 2010. (This will be a killer)

-High Gearing of 35.58%

Based on the above information, I will give this counter a miss. The revenue from the company is highly unstable ($23 million in 2011 VS $8 million in 2012), which will directly have an impact on its profit. The issue price of $0.54 is way too high, putting it at an astonishing PE of 158. From 2012 results, using the 50% dividend distribution policy for 2013, the equation just work out to be 0.32%, which is pathetic. HY2013 audited results are not very promising either. Post IPO, the gearing of the counter will remain to be high (Gearing of 35.58%), so if there is future acquisition, it will most likely have to issue new shares, resulting in share dilution.

Some useful information:
[30 May 2013], [9.00 a.m.] : Opening date and time for the Public Offer.
[04 Jun 2013], [12.00 noon] : Closing date and time for the Public Offer.
[05 Jun 2013]: Balloting of applications under the Public Offer, if necessary.
[06 Jun 2013], [9.00 a.m.]: Commence trading on a “ready” basis.

Rating for investment: 1/10

Disclaimer: You may use the above information as a guide, but please invest based on your own judgment.

Soilbuild Construction Group Ltd

Short Summary:

Soilbuild Construction Group, a subsidiary of the Soilbuild Group which was taken private in 2010, is a general construction company with over 36 years of experience during which have handled a wide range of projects, from residential buildings to conservation houses, schools, churches, industrial buildings and business parks. Soil-Build is graded A1 by BCA, which allows the company to tender for public sector projects in Singapore of unlimited contract value.

Forecast Dividend Yield:

2012: 3.31%*

2013: No Forecast

*Based on issue price of $0.25, 664,000,000 units after IPO, profit after tax of $22 million in 2012 and minimum 25% profit distribution policy.

Dividend Policy:

Strength

-Multi-property sector approach to construction projects. The company is capable of executing business space and both public and private residential property construction projects.

-Graded A1 under the BCA registration category CW01 for General Building, Soil-Build is allowed to tender for public sector projects in Singapore of an unlimited contract value.

-Increasing the use of pre-cast concrete work in projects, which enables the company to reduce reliance on labor, whose cost is increasing due to increase in foreign levies.

-Intends to invest in productivity improvement measures, increase the use of automation and improved technologies, and improve the efficiency of construction process.

-Expected healthy supply of construction projects by URA, JTC and HDB to meet population demands

-Intends to expand construction and/or project management operations to certain countries in Asia such as Myanmar and other South East Asian countries. The company has secured two contracts in Myanmar at the Latest Practicable Date

-Gearing of only 1.70%

Weakness

-Expect slowdown in construction sector in 2014 and beyond. BCA projected a total construction demand of between S$26 billion to S$32 billion for 2013 and S$20 billion to S$28 billion per annum for 2014 and 2015

-There may be a shift in HDB public housing strategy to focus on affordable housing for Singapore population. Contract value of tender may be lowered, which may impact on profit margin.

-Strong competition in Singapore construction sector. At the Latest Practicable Date, there are 64 registered general building contractors graded A1 under the category CW01, including Soil-Build.

-Order book not considered strong, amounting to approximately S$511.2 million only, comparing against a revenue of $213.5 million in 2012.

-Heavily reliant on foreign labor. The company has 642 foreign labor, representing  82.7% of the company total labor force. As announced in the Singapore government’s Budget 2013, there will be further increases in such levies in addition to the increase in the levies which was previously announced in the Singapore government’s Budget 2010, Budget 2011 and Budget 2012. In the Singapore government’s Budget 2012, the MOM announced a further 5% cut in the MYE quota for new projects with effect from July 2012. This is in addition to the 15% cut in the MYE quota for new projects with effect from July 2013 as announced in the Singapore government’s Budget 2011 and the reduction in the MYE quota by 25% over three years for the construction sector as announced in the Singapore government’s Budget 2010. (This will be a killer)

-Share expected to be illiquid, free float of only 25%. 496 million shares is controlled by parent company.

In my opinion, whether this counter is a hit or miss depends on its management strategy to reduce cost and win projects out of Singapore, where profit margins are higher. Singapore construction sector is a highly mature and competitive market. Going forward, I will expect public housing project margins to shrink further due to increasing levies and cutting of foreign workers quota. If HDB really change its focus to build basic housing to reduce the housing cost for its population, profit margins for construction companies taking the project will likely shrink further. Projects for industrial and business development typically has a higher profit margin. If the company is able to win more projects in this area, profits will likely increase. However, at the issue price of $0.25 and total unit of 664 million shares, the PE worked out to be 7.60, which is not really that attractive in investment sense. (In the prospectus, PE of 5.6 was based on 496 million shares pre-IPO). In summary, I will give this public offer a miss as I cannot find clear indication that the company will hand in better performance in 2013. Current book order of $511.2 million is not that strong a figure, basing on its revenue of $213.5 million in 2012. Besides, PE of 7.60 (to me) is definitely not an attractive figure to make me invest in a company.

Some useful information:
[17 May 2013], [5.00 p.m.] : Opening date and time for the Public Offer.
[22 May 2013], [12.00 noon] : Closing date and time for the Public Offer.
[23 May 2013]: Balloting of applications under the Public Offer, if necessary.
[27 May 2013], [9.00 a.m.]: Commence trading on a “ready” basis.

Rating for investment: 5/10

Disclaimer: You may use the above information as a guide, but please invest based on your own judgment.

Clouds in the forest or forest in the clouds?

Date: 20-Apr-13
Weather: Cloudy

*mds* and me are back to finish up visiting the remaining dome attraction in Garden by the Bay - Cloud Forest. Well, this dome is smaller than the flower dome and all in all, with the exception of the man-made waterfall, there isn't much else to see inside. It is a huge accomplishment that they can build a man-made waterfall inside a greenhouse, but I will rather see the natural ones. =p

ESE 5601 - Environmental Risk Assessment

Open book examination, meaning that answers are not found from the book. The questions from the first half of the paper are manageable, but the second half of the paper is a killer. I got lost on the units for the figures arrived and the parameters that the question asked the students to find are not direct formula application. All in all, I think I will most likely not do well for this module. One consolation is that it seems like everyone is having trouble answering the question as well. I shall believe in the power of moderation...

 

Expectation: C (Actual: B-)

Asian Pay Television Trust

Short Summary:

Asian Pay Television is a newly constituted Registered Business Trust formed to acquire its initial asset, the TBC Group. The TBC Group is Taiwan’s third-largest cable TV operator which operates exclusively in Taiwan, where it offers Basic Cable TV, Premium Digital Cable TV and Broadband services to households and businesses in five closely clustered and heavily populated franchise areas in northern and central Taiwan.

Forecast Dividend Yield:
2014: 6.94%
2015: 7.86%

*Based on maximum issue price of $1.00, 1,508,640,000 total units after over-allocation.

Dividend Policy:

100% distribution of its free cash flow

 

Strength

-Being only the 3rd largest operator, it still has room to grow the business before hitting the 33% market share limit imposed by the Taiwan government

-Have potential to further increase its basic Cable TV subscriber base by 121.3% from current level

 

Weakness

-Declining y-o-y operating profit due to cost rising at a faster rate than revenue

-Declining y-o-y average revenue per unit for Basic Cable TV and Broadband (representing 83.6% of revenue), possibly due to competition from competitors

-Relatively high gearing at 39.47%

-Taiwan Dollars has depreciate against SGD over the last 10 years

-Taiwan NCC has rezoned the franchised area and competitors have bidded to operate in TBC group franchised area. There is no guarantee that these application will be successful at current stage, however, if competitors are successful, TBC will faced increased competition. (Pg 61 of preliminary prospectus).

-Taiwan is considering a new ruling to lower the barrier of entry for new operator (Pg 59 of preliminary prospectus).

In my opinion, I will give this IPO a miss. The forecast yield is not that attractive to start with and I see limited growth for the trust operator. If Taiwan government proceeds to open up franchise area for competition, it will likely result in price war where operator will start lowering package cost to attract subscribers. The decreasing y-o-y average revenue per unit for Basic Cable TV and Broadband (representing 83.6% of revenue) is also a big negative. With cost rising at a faster rate than revenue for the past 3 years, I have doubts if the trust will be able to perform at its forecast level. The depreciation of Taiwan Dollars against SGD doesn't help either.

Some useful information:
[16 May 2013]: Price Determination Date.
[17 May 2013], [9.00 a.m.] : Opening date and time for the Public Offer.
[27 May 2013], [12.00 noon] : Closing date and time for the Public Offer.
[28 May 2013]: Balloting of applications under the Public Offer, if necessary.
[29 May 2013], [2.00 p.m.]: Commence trading on a “ready” basis.

Rating for investment: 2/10

Disclaimer: You may use the above information as a guide, but please invest based on your own judgment.



 

Flowers and a dome

Date: 29-Mar-13
Weather: Sunny and hot

Our first visit to the flower dome at Marina Bay Sands. Great to see so many beautiful flowers but the price for the ticket was a bit high. Guess most of it is used to pay off the air-conditioning fees for the dome. Luckily *mds* has a pair of free admission ticket for both of us. *yay* =)

Croesus Retail Trust

Short Summary:

Croesus Retail Trust initial portfolio consists of 4 Japan suburban malls operating at 100% occupancy. Most of the malls tenants are under long lease master tenant, with the weighted average lease expiry lease at 11.3 years. This will be the first Japan retail trust to list on SGX, giving investor exposure to Japan retail market.

Forecast Dividend:

2014: 8.0%

2015: 8.1%

*Based on issue price of $0.930 and Forex exchange rate of 79.15 yen to 1 SGD in 2014 and 78.78 yen to 1 SGD in 2015

Dividend Policy:

To distribute 100% of its distributable income for 2014 to 2015. Thereafter, the trust will distribute 90% of its distributable income.

 

Future potential acquisition assets

Shenyang Retail Project (Phase 1) - Shenhe Shenyang, Liaoning
Maluzhen Retail Project - Jiading, Shanghai
Mallage Saga - Saga
Luz Omori - Tokyo
Forecast Kyoto Kawaramachi - Kyoto
NIS Wave I - Tokyo

Overall Summary:

 

Strength

-Stable assets and dividend due to long lease tenants

-Mall at 100% occupancy

-Attractive yield

-yield calculation based on current weak yen, potential increase in yield (and stock price) when yen strengthen

-Good prospect given recent Japan government monetary stimulus to increase domestic consumption

 

Weakness

-Further weakening of yen, causing yield to decrease (In my opinion, this is unlikely unless the Japan government want to face the wrath of G20 for currency war)

-Strengthening of SGD

-High gearing, hence future acquisition (if any) will likely to be issuance of new units, causing yield dilution.

-High Gearing at 47%, can increase up to 60%

In my opinion, Yen is currently trading at all time low and there isn't further room for Yen to weaken (unless the Japan government wants to face the wrath of G20 for currency war). The retail trust provides attractive dividend at 8%, which easily trumps any of the current listed Singapore mall trust (Usually trading at 5%-6% yield range). The retail trust is stable, with most of its tenants under long lease. The prospect of earning from increase yield, which will likely result in increasing stock price when Yen strengthens easily beats all weakness. From the 10 years graph, Yen should be comfortable in the range of 65 Yen to 1 SGD, which gives it a potential to strengthen by another 18% from current rate. In times of crisis, Yen will also likely to strengthen as investors view it as a safe haven (See 2009 time frame)

Some useful information:

[3 May 2013], [9.00 a.m.] : Opening date and time for the Public Offer.
[8 May 2013], [12.00 noon] : Closing date and time for the Public Offer.
[9 May 2013] : Balloting of applications under the Public Offer, if necessary.
[10 May 2013]: [2.00 p.m.] Start of trading

Rating for investment: 9/10

Disclaimer: You may use the above information as a guide, but please invest based on your own judgment.