Far East Orchard Limited aka Orchard Parade Holding

Analyst report from Kim Eng on FEOrchard!!

Far East Orchard
The ‘Far East’ rises
Post-restructuring aftermath. With the completion of the restructuring exercise on 27 Aug 2012 (REIT Transaction and Asset Swap Transaction), FEOR got a cash boost of SGD308m vis-à-vis last quarter, largely from the net receipt of its divestment of its 3 hospitality assets. 3Q12 net profit also shot up to SGD126m (+680%QoQ, +293% YoY), mainly driven by the disposal gain of its 35% Yeo Hiap Seng (YHS) stake to its parent, Far East Organization (FEO). The newly acquired NMC/NSC units and hospitality management business also made their maiden contribution of SGD0.4m and SGD1.5m respectively, spanning a period from 27 Aug till 30 Sep 2012. We estimate average gross rentals for the medical units to be ~SGD10.50 psf/mth.
The need to replenish land-bank. Contribution form FEOR's property development business will ease as it had recognised the final profit from the Floridian project (TOP on 5 Mar 2012) in 3Q12 (remaining 6% of project). We revised our completion estimates as we had previously assumed that the bulk of Floridan's proceeds will flow through in FY12. Almost 92% of the total units in euHabitat have also been sold. The Bassein Road JV is in the early stage of development and no recognition of revenue is expected in FY12. (See Figure 2). Armed with fresh dry powder post-restructuring, we think FEOR is in a in a good position to capitalize on growth opportunities ahead. We expect to see more involvement from FEOR and its partners in GLS biddings moving forward.
Dividend. FEOR will be paying out 0.22086 YHS dividend in specie for every FEOR share on or about 3 Dec 2012. The 12 SG-cts special dividend will be distributed on 8 Jan 2013. Book closure date for both is on 23 Nov 2012.
Investment thesis intact. We continue to like FEOR for the following reasons: (1) Possible synergies with its parent, who is Singapore's largest private developer (built 1-in-6 private homes in SG) with purportedly the largest onshore asset and land bank (~80m sqft). (2) Clear focus post-restructuring, with emphasis on residential development (26% GAV), healthcare (23% GAV) and hospitality management (24% GAV). (3) FEO will inject future healthcare assets into FEOR, which we expect to benefit from rising medical tourism. (4) Undervalued in our view, with net cash already at SGD1.05/shr and 0.22086 YHS shares fetching another SGD0.66/shr (priced at a conservative SGD3.00). Reiterate BUY with an attractive SOTP valuation of SGD3.09.

http://www.maybank-keresearch.com.sg/Dow...121112.pdf

Who are the ones that talk about a Stock market operator and saying FEOrchard is overvalued?

wondering if is a gd deal? any tots?

26 November 2012 Singapore – Far East Orchard Limited (“FEOrchard” or the “Company”) has signed a non-binding memorandum of understanding (MOU) with The Straits Trading Company Limited (“STC”) to explore the proposed acquisition of STC’s entire hospitality management business (which includes the trade mark rights to the “Rendezvous” and “Marque” brands). STC’s hospitality management business currently operates hotels in Singapore, Australia, New Zealand and China. As part of the proposed transaction, STC will have the right to subscribe up to 20% of the share capital of the enlarged hospitality management company of FEOrchard.
Under the MOU, FEOrchard will also be exploring a proposed acquisition from STC and/or its subsidiaries of a 50% interest in three hotels in Australia, namely Rendezvous Studio Hotel Perth Central, Rendezvous Grand Hotel Melbourne and Rendezvous Hotel Perth, (together with the transactions in relation to the hospitality management business, the “Proposed Transactions”).
Commenting on the MOU, FEOrchard’s Group Chief Executive Officer and Managing Director, Mr Lucas Chow said: “We are pleased to announce the signing of our first MOU since the EGM in July, where we received strong endorsement from our shareholders supporting our restructuring. If the Proposed Transactions are to proceed, it will allow FEOrchard to grow our hospitality management business beyond Singapore and also create a platform to operate a portfolio of third party hospitality assets. This expanded portfolio will consist of more than 30 hotels and service residences under 5 distinct brands and more than 6,000 rooms under management with a regional footprint across Australia, New Zealand, China, Malaysia and Singapore.”

FEO is now undervalued and presents significant upside in time to come as their business model is now similar to that of CapMallsAsia and ARA.

Parent FEO will definitely opt to take scrips regardless of the market price of FEO. That was why the price crashed ex date, a deliberate press down to push down the issue price of the scrips too.

NAV of FEO will probably dilute down to $2.63 after issuing the scrip dividends.

FEOrchard share prices went up 6 cents at the end of the day was probably due to the following analyst report from Kim Eng.

Far East Orchard

In Acquisitive Mode
Overseas expansion. FEOR recently inked a non-binding MOU with Straits Trading Company (STC) to consider acquiring: (1) STC’s entire hospitality management business (including trademark rights to the "Rendezvous" and "Marque" brands); (2) 50% interest in three Australian hotels, namely Rendezvous Studio Hotel Perth Central, Rendezvous Grand Hotel Melbourne and Rendezvous Hotel Perth; (3) 50% interest in STC’s stake in Coastal Coffee Pty Ltd (café business); and (4) in return, STC will have the right to subscribe up to 20% of the share capital of the enlarged hospitality management company of FEOR.

Well-positioned for acquisitions. Depending on the final purchase consideration with STC (we estimate a deal size of SGD300-600m), we view FEOR's expansionary gambit positively. If the proposed transactions are to proceed (definitive agreement signings expected only after 31 Dec 2012), FEOR's expanded portfolio will consist of more than 30 hotels and service residences under five distinct brands (Village, Oasia, Quincy, Rendezvous, and Marque) and more than 6,000 rooms, with a regional footprint across Australia, New Zealand, China, Malaysia, and Singapore. FEOR has a strong cash position of SGD485.1m and a relatively low debt of SGD70.1m (D/E = 6.4%) as of 30 Sep 2012. Its strong balance sheet should place it in a good position to make acquisitions.

REIT fees to increase. Separately, Far East Hospitality Trust (FEHT) is also exploring the proposed acquisition of a leasehold interest in Rendezvous Grand Hotel Singapore and its retail component, Rendezvous Gallery Singapore from STC, which are valued at SGD284.65m as of 31 Dec 2011. Upon completion, FEHT will grant a Master Lease of the hotel component to the Far East Organisation, FEO (the Sponsor), as master lessee under a master lease agreement. We expect FEO to appoint FEOR as the hotel operator under the same terms as previous hospitality management agreements – basic fee of 2% GOR and incentive fee of 5% GOP. In addition, with a 33% stake in the REIT manager, FEOR will also benefit from the 1% acquisition fee and enlarged management fees.

In the grand scheme of things. We believe that the STC deal is just the beginning of FEOR’s overall expansionary plan. Within Singapore, we think that Park Avenue (hospitality arm of United Engineers), the Park Hotel Group (under the Law family), St******, the Meritus Hotel and Resorts (under OUE), Frasers Hospitality (under F&N), and others are possible acquisition/collaborative targets in the future. We continue to like FEOR for the following reasons: (1) Possible synergies with its parent, Singapore's largest private developer (built 1-in-6 private homes in SG); (2) Clear focus post-restructuring, with emphases on residential development, healthcare, and hospitality management; and (3) FEO will inject future healthcare assets into FEOR, which we expect to benefit from rising medical tourism. Reiterate BUY with TP unchanged at SGD2.31.

See the following for more detailed report from Kim Eng.
http://www.remisiers.org/cms_images/rese...312121.pdf

what is so nice about Rendezvous brand?

hmmm i am actually quite suprised that yeoHS can still sell above $3 today

Forward PE based on KimEng Report for year 2013 and 2014 EPS of around 6 to 7 cents, the current share price is traded at PE of 48X and price to book of more than 3X it is still too expensive. Target price based on the report is $2.25, more downside to go? Had already sold off my DIS YHS shares early in the morning!!

http://www.maybank-keresearch.com.sg/Dow...031012.pdf

(03-12-2012, 11:44 PM)ngcheeki Wrote: Forward PE based on KimEng Report for year 2013 and 2014 EPS of around 6 to 7 cents, the current share price is traded at PE of 48X and price to book of more than 3X it is still too expensive. Target price based on the report is $2.25, more downside to go? Had already sold off my DIS YHS shares early in the morning!!

http://www.maybank-keresearch.com.sg/Dow...031012.pdf

Congrats! You can recycle the funds to some other undervalued stocks

Sometimes i wonder who are making all the buy orders...

-BB making all the buy and sell order to create a price?
-YHS has some hidden underpriced land or assets?
-The largest shareholders intend to take YHS private?
-Mr Market wildly optimistic?
-Shareholders using the recent $6.10 (from yahoo finance) high as an anchor, so $3.28 as of now isnt too high?

mystery

anyone opting for the scrip for the FEO 12 cents scrip dividend scheme?

about STC getting the right to subscribe up to 20% of the share capital of the enlarged hospitality management company of FEOR, anyone know is it gg to be on a new share placement basis or not?