Low Keng Huat (Singapore)

LKH share was not moving up , could it be other negative factors that overshadowed this piece of possitive news?

(07-05-2020, 02:40 PM)Stocker Wrote: LKH share was not moving up , could it be other negative factors that overshadowed this piece of possitive news?

Well, the overall property scene is dismal and expected to get worse in a recession in Sgp. All the property counters similarly affected and on top of that LKH has a 3star hotel(Duxton) in Perth that's probably grind to a halt for couple of mths. However all this has been discounted in the drop in share price b4 this good news announcement. Anyway I am not too concern about the share price.Just waiting to collect my rich div. Beats putting in SSB.

I made quite a bit of money on LKH as a result of paya lebar square but i have sold all of it. Following it over the years, i think it has done a terrible job with its property development, buying land at high en bloc prices that i wonder how to sell profitably in the next few years. This little good news on AXA is of some help but not enough to make up for the probable losses for its property development arm. And LKH looks very leveraged.

The second generation of the management team just not up to the mark. Tan Sri Low is no longer around to guide them.

There are a couple of reasons why I think the reaction to LKH's announcement could be muted besides the fact that the market is obviously obsessed with anything Covid 19 or the recession it induced:

1. The deal is not straightforward. It involves an LKH 20%-owned associate selling its entire stake in the holding company for AXA building- 50% to Alibaba and another 50% to PRE13 which LKH also has a 20% stake in. Hence, there is a realised effective disposal of half its original 20% stake in AXA building. The announcement may not be long but it's littered with similarly sounding company acronyms (eg PSIPL, PSHPL, PSPPL) so it's easy to get lose track of the actual transaction mechanics. I have a fair amount of experience in dealing with corporate action announcements and even then I need to read the announcement a couple of times just to make sure I got the gist of it.

2. SPH is getting way more mention than LKH despite its much smaller stake because....guess who owns the medium on which the press release was published?

(09-05-2020, 09:16 AM)Stocker Wrote: The second generation of the management team just not up to the mark. Tan Sri Low is no longer around to guide them.

The one that is driving the co is Low Keng Boon, LKH's brother. So in a sense it is still 1st generation.

(09-05-2020, 01:05 PM)Debronic Wrote: There are a couple of reasons why I think the reaction to LKH's announcement could be muted besides the fact that the market is obviously obsessed with anything Covid 19 or the recession it induced:

1. The deal is not straightforward. It involves an LKH 20%-owned associate selling its entire stake in the holding company for AXA building- 50% to Alibaba and another 50% to PRE13 which LKH also has a 20% stake in. Hence, there is a realised effective disposal of half its original 20% stake in AXA building. The announcement may not be long but it's littered with similarly sounding company acronyms (eg PSIPL, PSHPL, PSPPL) so it's easy to get lose track of the actual transaction mechanics. I have a fair amount of experience in dealing with corporate action announcements and even then I need to read the announcement a couple of times just to make sure I got the gist of it.

2. SPH is getting way more mention than LKH despite its much smaller stake because....guess who owns the medium on which the press release was published?

The same goes for Perennial, the lead member of the consortium. Its share price has not moved after the announcement.
It could mean that market is not overly excited about the deal. The way the deal is structured suggests that the consortium is cash-strapped.

LKH has been well run. But going into serviced-apartment business may be mis-timed.

(10-05-2020, 08:32 PM)Shiyi Wrote:

(09-05-2020, 01:05 PM)Debronic Wrote: There are a couple of reasons why I think the reaction to LKH's announcement could be muted besides the fact that the market is obviously obsessed with anything Covid 19 or the recession it induced:

1. The deal is not straightforward. It involves an LKH 20%-owned associate selling its entire stake in the holding company for AXA building- 50% to Alibaba and another 50% to PRE13 which LKH also has a 20% stake in. Hence, there is a realised effective disposal of half its original 20% stake in AXA building. The announcement may not be long but it's littered with similarly sounding company acronyms (eg PSIPL, PSHPL, PSPPL) so it's easy to get lose track of the actual transaction mechanics. I have a fair amount of experience in dealing with corporate action announcements and even then I need to read the announcement a couple of times just to make sure I got the gist of it.

2. SPH is getting way more mention than LKH despite its much smaller stake because....guess who owns the medium on which the press release was published?

The same goes for Perennial, the lead member of the consortium. Its share price has not moved after the announcement.
It could mean that market is not overly excited about the deal. The way the deal is structured suggests that the consortium is cash-strapped.

LKH has been well run. But going into serviced-apartment business may be mis-timed.

That, plus the fact that Perennial's market cap is also almost 2.9 times LKH's but its initial stake in AXA is only ~56% bigger than LKH's. So maybe it will take relatively more to move the needle.  
Anyway for those who want a quick look at how the deal is structured, the diagrams in Annex A of this annoucement is quite informative:

https://links.sgx.com/FileOpen/Perennial...eID=610641

1H2020 as at 31 Jul 2020
Rev $22m (vs 17m)
GP  $6m (vs  6m)
NP  $51m* (vs 0.3m)
* due to sales of equity stake in PSH (AXA tower to Alibaba)
The Group will continue to be selective in land bidding and investment projects. The Group will strive to maintain rental rates for renewals. The Management remains focused on maintaining stable and sustainable distributions to shareholders while achieving long-term growth.

https://links.sgx.com/FileOpen/20200914_...eID=631531

Stay home and stay healthy, everyone.