I do like Roxy-Pacific too. I own this stock but not in a big quantity. I am not adding for now, as I am undecided on the market's current direction (especially because the index stocks look rather bearish), and would prefer to hold a substantial amount of cash. Here's my take on Roxy:
1. A big part of Roxy's RNAV comes from its hotel (nearly 50cts out its RNAV of $1.10 (Kim Eng's take,but mine is more conservative). We therefore have to look at Roxy (at least partially) in comparison with other hotel stocks (like St Land, Hiap Hoe and Superbowl), which also trade at big discounts to RNAV.
2. Roxy's management is rather good at selling its condo projects quickly, buying land at reasonable prices; timing the market rather well. In my opinion, it has not overpaid for its land purchases recently, so I don't think it will be affected too negatively as the physical residential market turns down (which in my opinion, is overdue).
3. Regular insider buying is giving stock price some support.
4. The company is rather transparent in disclosing info, shown by the revaluation figures for its hotel, and the project-by-project info in its results briefings for eg.(which one can retrieve from SGX's website).
5. Currently, property developers could do well NOT to buy land (unless it's at opportunistic prices) but to simply dish out good dividends or do share buybacks. You can see clearly the effects of share buybacks (Ho Bee and Guthrie for a long while, and CapLand recently) and good dividends (Wing Tai's share price jump recently when it declared a good dividend) vs the market not liking Tuan Sing's or Heeton's land purchases lately. Note also that CDL, a property market leader, has not been in the market for land for a while now.
In a bear market like now, for safety, I like stocks with (1) high RNAVs (especially if it's coming from pre-sold properties, because the cash inflow can translate to good dividends next 2-3 years), (2) where there are insider buying, or (3) which are less liquid. EPS can swing wildly and target PEs can shift according to analysts' likings and expectations, so I am not a big fan of PEs (at least not in the current market).
It may be strange that I like lower liquidity stocks, but in the current market, high liquidity stocks (even the good ones) are targets for shorting by big players (or even CFD players). My guess from looking at price and queue patterns is that Chip Eng Seng could be one such target because the stock is highly liquid, vs Hiap Hoe, Superbowl or Roxy (all tightly held). (On the plus side, higher liquidity stocks do become good trading candidates and also allow you to sell quickly for cash if you need to do so.)
Having said that, shorting does allow me to buy a counter at lower prices and then patiently wait for the shorting to dry up.
Stamford Land has entered into an MOU to sell and lease back 3 of its Aussie hotels. The sale price is A$316m or S$398m. Based on book value of A$148.78m, it will book a profit of A$167.3m, or S$210.8m (24.4 Singapore cts). No wonder Ow Cho Kiat had halted buying St Land shares couple of months ago, because it would be a breach of SGX rules.
NAV of St Land will go up by 24cts to 83cts as a result of the sale. Assuming the remainder hotels have a similar value per key (although hard to compare cos 2 of them are leasehold, but 1 of them has redevelopment potential) RNAV will rise to $1.12. This does not include profits that will be reported as early as next month for its Sydney apartment project (profit to be realized only on TOP).
The sale value of about $400m is even higher than St Land's current market cap of $397m. After the sale, St Land will still own 5 hotels, 1 office project with some conserved buildings in Peth, an office space in Singapore, some apartments in Auckland, and substantial yet-to-be booked profits in its Sydney apt (which is 90% sold).
Sounds excellent~@!! - any value investor would buy it, if not for the uncertainties plaguing the market. Thanks for sharing. I will keep this counter on my radar screen.
Stamford Land: DMG has joined Lim & Tan in covering this counter. In its maiden report yesterday, it applauded St Land's MOU to sell its 3 hotels as a move to recycle capital and unlock value, and set a target of 78ct for the counter, a 30% discount from its SOTP (sum of the part) of $1.12 per share. DMG also said that with the strengthened balance sheet, St Land will be able to distribute higher dividends, including a special one from the hotel sale proceeds. Possible redevelopment surplus from its other hotel in Sydney and the rental income of about A$10m p.a. from its Perth's office building Dynons, are other highlights in DMG's report. Meanwhile, if the expected big profits from its current Sydney condo is booked this quarter, 1H results due soon may see a surprise interim dividend.
Chip Eng Seng: CES will be launching its DBSS HDB flats at Bedok Reservoir this Friday. Called Belvia, it is within a short walking distance to a new MRT station at Bedok Town Park (ready 2017?). CES bought the land at $224 psf ppr last October. One property consultant has estimated the total cost of construction and land at $430-470psf. I reckon that CES could sell the flats at an average price of $550psf, which is a reasonable estimate compared to Sim Lian's Centrale 8 at Tampines (about $600-640psf). If total cost is assumed to be $450psf, gross profit could then be about $50m, based on a GFA of 502,400 sq ft. Meanwhile,CES has started putting up the showflat for its freehold Fort Road condo, for an expected launch in Q4. CES' Q3 good results due next month should also be a price supporter for the stock.
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