HupSteel

I think this counter will do fine in 8 years 8 months 8 weeks and 8 days. 8888 huat ah!!!

Rental unlikely to be good. Given the location plus the impending property correction, is the safety margin still there?
If Hupsteel is 15 cents, it is a good buy....

How much does it cost to redevelop all the existing properties to a state where the properties can be rented out and generate income?
Does Hupsteel have cash to do so?


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Andy - Monday, 22 July 2013 18:34Location in Kim Chuan Dr is very non-glam. The area is low-cost industrial, so I wonder if the new 7-storey building's rental potential will be curtailed by the surroundings.

http://www.tremeritus.com/2013/07/24/9k-...ates-rise/

Good Luck to property counters...


When US QE start to scale down from Sep 2013, the interest rate has to move north, similar to the bond yield. Many central banks need to align the interest rate so that investment fund will not flow out. MAS's tigtening of the loan borrow is the precautionary measure but necessary to avoid servere hard landing of property price. When US 10-yr bond yield rise from 2.5% to 3%, Singapore 10-yr bond yield likely to follow and this is very likely to happen on Q4 2013. It is good for any buyer to hold back the purchase of property as property price has peaked and may reverse to head south soon.

happened to pass by kim chuan earlier today.

was pleasantly surprised that the official sign for the erection was up and 2 more new info.

and that the land was planned for a single user 8 storey building instead of the earlier announced 7 storey building.

expected completion was stated as july 2014 instead of the 18months (ie end 2014) as announced earlier.

and the company is continuing its sharebuy back, the last being yesterday.

personally, as such, I would expect the NAV to be revised upwards sooner than later.

but agreed that the steel biz is still the core concern.

as before, please do your own research.

Historically, the core business gave EPS of approx 2 cents. If we give it a P/E of say 7 (given the cyclical nature and lack of resilience), valuation is around 14 cents.

The property development at Kim Chuan is projected to add another 0.5 cents to the EPS. 2.5 x 7 = 17.5 cents.

Current share price is already 23 cents. Is Hupsteel over-valued as of now?

Your valuation based solely on earnings? Why never account for their property holdings (both freehold and leasehold)?

Market valuation is only realized when the transactions are actualized. Before this happens, any market valuation is just "paper value".


Paper value can go up or come down. If the property crisis is very bad, the valuation can even go below the original valuation, be it 10 yrs or 20 yrs ago...Not sure if people still remember the property doldrum in the late 1980s to early 1990s. No one wanted to go near properties for at least a decade.

Once Spore loses its political stability for one reason or another, it is not inconceivable for such major corrections to happen. Money can flow in and out very fast. One should diversify out of Spore too, for a more holistic and robust portfolio.

One key question which I have asked before was “Does Hupsteel have money to re-develop all its freehold properties to a state where it is income-generating, and can each of these properties be rented out with sufficient occupancy for that piece of property to be EPS-accretive?"

I give you a good example. For pure property counters, analysts also give a certain level of discount to RNAV valuation, sometimes the discount can be as large as 30 to 40%.
Hupsteel is not even a "pure property play". The discount should be even greater.

(27-07-2013, 08:40 PM)lavue Wrote: Your valuation based solely on earnings? Why never account for their property holdings (both freehold and leasehold)?

(27-07-2013, 10:58 PM)Stockerman Wrote: ...
I give you a good example. For pure property counters, analysts also give a certain level of discount to RNAV valuation, sometimes the discount can be as large as 30 to 40%.
Hupsteel is not even a "pure property play". The discount should be even greater.

I guess this is something that many hupsteel supporters fail to realise

"“Does Hupsteel have money to re-develop all its freehold properties to a state where it is income-generating, and can each of these properties be rented out with sufficient occupancy for that piece of property to be EPS-accretive?""

Thanks i like this,

as a conservative family own biz, HS is inclined to internal/self-finance the redevelopment of it's land... this will take time, i like them to go slow and one by one.
Until then, balance the income Vs debt cashflow.. keep the dividends low...hang on for the steel biz, i think this is how i would run HS if it's my biz!

Hope I will be not "outcast" again for saying for these hard truths...

(28-07-2013, 12:50 AM)safetyfirst Wrote:

(27-07-2013, 10:58 PM)Stockerman Wrote: ...
I give you a good example. For pure property counters, analysts also give a certain level of discount to RNAV valuation, sometimes the discount can be as large as 30 to 40%.
Hupsteel is not even a "pure property play". The discount should be even greater.

I guess this is something that many hupsteel supporters fail to realise