King Wan Corporation

Just looked at KTIS FY15 results. Quite a shocker.

EPS was baht 0.31 for 9 month but FY EPS was baht 0.19. Did they made a losses of 12cts in the last quarter?

Based on last year payout which is around 50% of EPS, dividend income for KWC from KTIS might be half of last year. Not that it makes a big impact on KWC EPS but just another one which didn't help much.

TA Corp has given a very clear account on the Dalian project in their latest annual report.

ownself buy ownself?

http://infopub.sgx.com/FileOpen/Annual%2...eID=397481

TA Corp 2015 Annual Report Wrote:3.2.4 Recoverable amount of receivables from associates/joint ventures and investment in associates

(a) Dalian Shicheng Property Development (S) Pte Ltd (“DSPDS”) 

The Group has 25.37% equity stake in the associate, DSPDS. The ability to recover receivables from and the carrying amount of investment in DSPDS is dependent on the ability to sell the properties (“Singapore Garden”) of Dalian Shicheng Property Development Co., Ltd (“DSPDC”), a subsidiary of DSPDS in Dalian, PRC at the values estimated by management and to develop the properties at the cost estimated by management. The values have been estimated by management with the assistance of an independent valuer. 

In 2015, $4,811,000 of carrying amount of investment in DSPDS has been fully impaired as a result of reduction in estimated net realisable value of properties of DSPDC. The assessment of recoverable amount of investment in DSPDS is based on market value of development properties assuming full completion of partially completed units and development of remaining land. 

In addition to full impairment of the investment of $4,811,000 in DSPDS in 2015, the Group has made an allowance of $19,287,000 (2014: $Nil) for impairment of receivables from DSPDS which represents all receivables from DSPDS as at December 31, 2015.


(b) Soon Zhou Investments Pte. Ltd. (“SZI”) group, comprising SZI and its subsidiaries 

The Group has 50% equity stake in the joint venture, SZI. At December 31, 2015, non-current receivables of the Group include $14,548,000 (2014: $4,057,000) owing by SZI group which owns units of properties in Singapore Garden, a multi-phased mixed development project in Dalian, PRC. 

In 2015, a member of the SZI group contracted with DSPDC to purchase units of properties and rights of usage of basement and car park lots in Singapore Garden for cash consideration of RMB174.9 million (equivalent to $38.1 million). Subsequent to December 31, 2015, SZI group remitted $36.0 million (equivalent to RMB165.4 million) to DSPDC using a $23.0 million bank loan (Note 3.2.5) and funds totalling $13.0 million equally contributed by the Company and a Joint Guarantor. Transfer of ownership of the property units to SZI group in accordance with PRC regulations is in progress and is expected to complete within 2016. 

After considering the financial position of SZI group and the valuation of the properties in Singapore Garden at December 31, 2015 by an independent valuer, management expects the amount of $14,548,000 to be recoverable from SZI group. In making this assessment, significant assumptions include the ability of DSPDC to complete the development of certain partially completed units included in the sale to SZI group and the ability of SZI group to realise the estimated values of the properties. 

(c ) Associate in Singapore 

The Group has made an impairment loss of $2,900,000 for receivables from an associate after projecting the net realisable amounts from sale of completed properties of the associate and the additional cost for extension of certain government regulation. The amount which would ultimately be recoverable will be impacted by any change in these projections. 

3.2.5 Assessment of contingent liabilities for guarantees given in connection with bank loans of DSPDS group and SZI group (entities described in Note 3.2.4) 

(i) The Company (2014: A subsidiary) together with another shareholder (the “Joint Guarantor”) of the associate, DSPDS, provided joint and several corporate guarantees to a bank for credit facilities utilised by DSPDS to lend to its subsidiary, DSPDC for development of the Singapore Garden. At December 31, 2015, the outstanding bank loan of DSPDS was $23.0 million (2014: $24.5 million). 

(ii) The Company, together with the Joint Guarantor, provided joint and several corporate guarantees to a bank for a development loan facility utilised by DSPDC. At December 31, 2015, the outstanding bank loan of DSPDC was RMB160.3 million (approximately $34.9 million) (2014: RMB160.3 million approximately $34.5 million). In February 2016, DSPDC repaid this bank loan using funds remitted by SZI group to DSPDC in connection with the purchase of units of properties by SZI group from DSPDC (Note 3.2.4 (b)). 

(iii) In 2015, the Company and the Joint Guarantor provided joint and several guarantee to a bank for a $23.0 million bank loan taken by SZI to fund part of the acquisition of properties from DSPDC (Note 3.2.4 (b)).

The outstanding bank loans of DSPDS, DSPDC and SZI which are covered by joint and several guarantees from the Company and a Joint Guarantor amounted to $80.9 million at December 31, 2015 (2014: $59.0 million). Arising from settlement of DSPDC’s bank loan subsequent to December 31, 2015, the aggregate outstanding bank loans covered by the guarantees reduced to $46.0 million comprising $23.0 million for DSPDS (paragraph (i) above); and (ii) $23.0 million for SZI (paragraph (iii) above). 

In assessing whether the Group needs to record any liability in respect of the above joint and several guarantees, management engaged an independent valuer to estimate the gross development value (“GDV”) of the properties of DSPDC as at December 31, 2015 which is the projected value upon full completion of development of units which are currently partially developed or yet to be developed. The valuation also includes the market value in existing state at December 31, 2015 which is the GDV less all cost to complete, marketing cost, sales tax and developers’ profit. 

Based on these estimates, management expects that DSPDC will be able to realise sufficient proceeds to repay its loan from DSPDS and in turn for DSPDS to pay the bank loan referred to in paragraph (i) above. 

Management expects that future sales proceeds from units purchased by SZI from DSPDC will be sufficient for SZI to repay the bank loan referred to in paragraph (iii) above. 

It is anticipated that the Group together with the Joint Guarantor will be required to fund instalment payments due on the bank loans and cash required to continue development of partially completed units of DSPDC included in the purchase contract referred to in Note 3.2.4 (b) and development of the currently undeveloped land. However, such payments are expected to be recovered subsequently from the eventual sale of DSPDC properties. 

Based on the above assessment, management has made the judgement that (a) as of December 31, 2015, no provision for loss need to be made in connection with the bank guarantees; and (b) with the full impairment of the Group’s investment in and advances given to DSPDS at December 31, 2015, the Group discontinues recognition of any share of losses of DSPDS group in 2015. 

The above assessment is based on the best estimates of net cash flows which may be realised from sale of properties of DSPDC and is highly dependent on estimates of cost to complete the partially completed units, the ability to sell the properties for the estimated amounts, the timing of sale relative to timing of repayment of bank loans and the assumption that the Joint Guarantor will jointly fund 50% of instalment payments due on the bank loans and jointly provide any cash required to continue development of the partially completed units of DSPDC and the remaining land of DSPDC. Management will monitor the above projections, reassess the judgements and accounting estimates periodically.

Profit Guidance for the Fourth Quarter and Full Year ended 31 March 2016

The expected loss is primarily attributable to the following reasons:
a. Impairment to the value of available-for-sale investments held in Thailand,
b. Allowance for loans made to an associate dealing in property development in the People’s Republic of China.

The company will announce its unaudited consolidated financial statements for 4Q2016 and FY2016 on or before 27 May 2016.

(27-04-2016, 06:41 PM)cyclone Wrote: Profit Guidance for the Fourth Quarter and Full Year ended 31 March 2016

The expected loss is primarily attributable to the following reasons:
a. Impairment to the value of available-for-sale investments held in Thailand,
b. Allowance for loans made to an associate dealing in property development in the People’s Republic of China.

The company will announce its unaudited consolidated financial statements for 4Q2016 and FY2016 on or before 27 May 2016.

Seems like the china investment still a sinking hole....

(27-04-2016, 11:23 PM)desmondxyz Wrote:

(27-04-2016, 06:41 PM)cyclone Wrote: Profit Guidance for the Fourth Quarter and Full Year ended 31 March 2016

The expected loss is primarily attributable to the following reasons:
a. Impairment to the value of available-for-sale investments held in Thailand,
b. Allowance for loans made to an associate dealing in property development in the People’s Republic of China.

The company will announce its unaudited consolidated financial statements for 4Q2016 and FY2016 on or before 27 May 2016.

Seems like the china investment still a sinking hole....

More like a black hole as they seems unable to escape from it.

DISPOSAL OF SHARES IN AN ASSOCIATED COMPANY

http://infopub.sgx.com/FileOpen/King%20W...eID=406516

KWC gave up on Starlight Suites. Bite the bullet and moved on.

(25-05-2016, 10:36 PM)GPD Wrote: DISPOSAL OF SHARES IN AN ASSOCIATED COMPANY

http://infopub.sgx.com/FileOpen/King%20W...eID=406516

KWC gave up on Starlight Suites.  Bite the bullet and moved on.

I find it unusual that KWC did not even bother to try to lower the selling price for the units and sell off as many units as possible. The sale price psf has not changed all these months and now they're staring at additional stamp duties from the government.
There are 23 units and it's sold for only $16.8mil?
Of course it depends on the size of each unit, but it does seem cheap.

 "...... MPS’ unaudited total capital deficiency of about S$25,000 on disposal (the “capital deficiency”). The capital deficiency was derived after taking into account an agreed value for the Investment Assets, capitalisation and waiver of portion of receivables due from MPS to its shareholders. The Consideration was satisfied wholly in cash. "

Lots of big words, but I guess what it really means is that KW has previously already written off their investment in MPS. 
After including the remaining amt that MPS owes KW, and considering the value of the 23 units, and the debt outstanding etc, they came up with this figure $16.8mil.

Ouch. Definitely a poor investment.

Only good news, (somewhat good news), is that if I am not wrong, KW has already previously written off the investment so there shouldnt be any more losses to be recognised from this. It's just converting a balance sheet item at vallue, into cash instead.
Also, with this sale, at least KW does not face additional stamp duties, which is supposed to kick in next month.
It just goes to show KW has no confidence selling this anytime soon at the stated value.

(25-05-2016, 10:52 PM)TTTI Wrote: [quote pid='129884' dateline='1464187018']
I find it unusual that KWC did not even bother to try to lower the selling price for the units and sell off as many units as possible. The sale price psf has not changed all these months and now they're staring at additional stamp duties from the government.

In theory, Economics say that demand increases with price reductions. But often, in practice, it is the other way around, ie. demand increases with price increases.

It is not exactly unusual if you see it from the lens of behavioral finance or how things really work.

Starlight Suites is a 35storey/105unit FH residential development located in the District 9. Selling the remaining 20+ units at a discount is going to anger the majority of the ~80unit holders, not exactly good for someone who intend to do long term business in property development. Losses strike deep in the hearts of investors due to loss aversion. My guess is they want their brand to be associated with prestige, not cheapness (aka 'fire sale') with property investors. It might be better to take a bigger loss on your bottom line, than taking smaller hits on your bottom line and brand.

Based on KWC stakes in MBD and MBD stake in MBS, it probably gets back about $6mil. No great but helps in short term cash flow.

23 units (although there are still 31 unsold units in my record) for $16.8mil is about $730k per unit which is way below the average price of $1.6mil for those previously sold. That's a huge discount given the the buyer. Basically, they sold 10 units at current pricing and give away the remaining 13 units for free!

Sale of SLS averaged 0.73 units per month since launch and no sale for the last 6 month. I am unsure why SLS is so unpopular. Overpriced? Wrong location? No marketing?

In comparison Skywoods, is doing pretty ok and I thought the location is not as good as SLS's.

(26-05-2016, 10:14 AM)GPD Wrote: Based on KWC stakes in MBD and MBD stake in MBS, it probably gets back about $6mil.  No great but helps in short term cash flow.

23 units (although there are still 31 unsold units in my record) for $16.8mil is about $730k per unit which is way below the average price of $1.6mil for those previously sold.  That's a huge discount given the the buyer.  Basically, they sold 10 units at current pricing and give away the remaining 13 units for free!

Sale of SLS averaged 0.73 units per month since launch and no sale for the last 6 month.   I am unsure why SLS is so unpopular.  Overpriced?  Wrong location?  No marketing?

In comparison Skywoods, is doing pretty ok and I thought the location is not as good as SLS's.

I havent had the time to look into detail the dynamics of the units sold, are the areas in terms of sq ft the same for all the units?
My impression is that SLS is way overpriced. 
From existing listings, all units are priced within >$2000+ psf range
In the current market, it's just not going to happen. That's way too expensive, even for the river valley area.

The Skywoods is doing much much better. An agent texted me just yesterday to say that there's only 3 units available.


The Skywoods is driven by KW's other partner, Hock Lian Seng and they have a much better track record in managing project costs and marketing.
At the launch, the skywoods was priced much higher (ard $1.5-1.6k psf). I know because I went to the showflat to enquire and see how it's doing.
Once they saw that sales were slow, and that the market is turning, they cut the price aggressively and the recent transactions are all in the $1.1-$1.2k psf range.
Which is why i said I am surprised KW did not even attempt to lower selling price to move units.
Sure, prior buyers may be upset, but that's the same for every development. Most developers are cutting prices to move units.
Property is all about timing, so even if the prior are upset, that's too bad. Someone has to take the losses.