2nd Liner Prop Stocks

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13 years 4 months ago #4935 by sumer
St Land gets coverage in Business Times today, in an article titled "Stamford Land back on investors' radar screens".
 
Gist of the article:
 
Its Sydney luxury apts, which are 90% sold, should see profit recognition (on completion of construction, ie, no profit has been booked yet) this year (although I think it's next year).
 
St Land's interim profit of $44.3m is already much higher than previous full year profit of $24.5m.
 
Little coverage by broking houses, safe for Lim & Tan, but CIMB has last week started writing about the stock.
 
In 2008, St Land received an unsolicited offer for its hotels, at a price of A$850m, compared to its book value of A$382m, showing an undervaluation of A$468m, or a hidden value of 60cts per share (not reflected in its present NTA).
 
Co has recently disclosed it may redevelop some of its hotels into residential projects, since they are located in prime districts. 3 potential redevelopments are sited.
 
Strong earnings this year could mean higher dividend payout.
 
Insider buying by Ow Cho Kiat bodes well for the stock.
 

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13 years 1 month ago - 13 years 1 month ago #5630 by sumer
Gallant: DBS buy call today, Tgt 88cts. Shd be the same RNAV story.
Tuan Sing: seems to move in sympathy with Gallant. RNAV story intact.
Heeton/Tee Intl: I understand their new launch at Killiney, The Boutiq (JV between Heeton, Tee, KSH), has sold about 15 units (out of 130 units of 1-2 bedders) prior to preview, at about $2,300-2,500psf. Nearby Oxley's Devonshire Residences has sold more than 70% at above $2,500 psf. The Boutiq will be previewed or launched next week. The land was bought at a very low $1,080 psf, so this will be quite a profitable project. I expect 70-80% to be sold within a month cos of the Mickey Mouse factor.  Heeton shares are however, not liquid, but RNAV of about $1.20-1.30 is supporting share price. Tee has some insider buying recently but there seems to be a big seller out there as well.
 
 
 
 
 
 
Last edit: 13 years 1 month ago by sumer.

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13 years 1 month ago #5635 by Morpheus
Be careful of property stocks in Singapore. After the General Elections, you either have a good market rebound as the government relax the cooling measures OR you get a crashing defeat. It is a 50-50 game. I would not take this risk.

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13 years 1 month ago #5689 by jinraidx
I agree especially with development plays. Huge cash will be needed for the projects. did I mention huge amount of cash needed? Yes, shareholder negative.

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13 years 1 month ago #5698 by sumer
Replied by sumer on topic 2nd Liner Prop Stocks
A few 2nd liner prop stocks have had a good run up over the past 2 weeks, and at current levels, it would be good to take some profit off the table, irrespective of their stories. Examples of ones that I have sold out/reduced are Chip Eng Seng, Tuan Sing and Gallant (though not quite on the same boat), since they have gone up substantially in a short time.
 
I think many property stocks have priced in some 10-15% fall in the price of physical properties, at least; so, an actual fall in physical property prices later is probably a non-event, unless it's a more severe 20-30%.
 
There is also little concern about the raising of money for construction as most developers have pre-sold many of their units (hence getting a bank loan is not difficult). Also, many developers actually have huge cash inflows (and a good amount of profits too) over the next few years from projects that they have already pre-sold substantially,
 
My concern, however, are
 
(1) the inability of developers to buy land cheaply going forward. This leads to the thinning of margins, so it may be hard for them to repeat the good profits they have reported/going to report over the next 2 years. Too many developers are bidding for land, and aggression in bidding means thinner margins for winners, while caution means no new projects (and hence, new profits) for losers;
 
(2) the inability of the luxury end of the market to really move, in terms of price and quantity of units actually taken up;
 
(3) the huge number of TOP units in 2013-2014; that's probably when the real effect of oversupply will be felt.
 
Until then, though, there could be swings here and there in prices of 2nd liner developer stocks as their asset (or other) stories get covered by one broking house or another. In a market where small players are getting out of s-chips because of the risk of dubious accounting and missing money, the 2nd liner developer sector will probably see some rotational interest, especially because the stocks' high RNAV (which is actually existent) does give some comfort to anxious investors.
 

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13 years 1 month ago #5702 by yeng
Replied by yeng on topic Re:2nd Liner Prop Stocks
I agree that it is a good idea to take profit on property counters that have recovered from the Japan crisis. My main concern is the start of interest rate increases --- and a sustained increase.

This would be led by the US rate hike which is widely expected to be in 2H of this year. I dont see how property prices can stay steady when the debt-servicing part starts to go up. Cheap borrowing will come to an end.

The whole thing is actually complex because if you consider the demand side, hey, dont forget the rich Chinese & Indian nationals, not to mention the Indonesians.

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