Popular Holdings

(11-09-2013, 11:01 PM)karlmarx Wrote: Wow that is a pretty high over-valuation of its properties. I didn't think they had to sell the 2 units at a loss. This could mean the real estate assets held on its balance sheet may be similarly overvalued.

From the latest Q1 (Jul) financials,

Properties Held for Sale = $62,856,000

I'm assuming this comprises of 18 Shelford (2 units) + 8Raja (24 units)
- 18 Shelford : Valuation = $9,316,000 (from the recent sale proposal)
- 8 Raja : From URA data, total 26 units (13 units each of 1572sqft & 2023sqft). 2 units (1572sqft) sold @ $2.1m (Floor Lvl 6-10) & $2.325m (floor lvl 11-15)

Deduct 18 Shelford * 2 units @ $9.316m
=> 8Raja * 24 units = $53.54m
=> $2.231m / unit

I suppose if we consider that the units sold so far are ~$2.2m average per unit for the smaller units (1572sqft), the carrying valuations may not be too over-valued....? Have to really study the latest psf data for that area to get a better picture, especially with the impact of the latest cooling measures seeming to be having effect... but, too lazy...

Fortunately, Popular has a strong Balance Sheet (still Nett Cash) and will survive any Property downturn better (compared to when they just embarked on this Property biz)... Have to watch the net cash level closely... if planning to hold for longer term...

Although i dont like popular for venturing into property, i think 8 raja which is selling at 1300-1400psf, for a freehold property isnt really that expensive, i would think it is quite a fair price compared to many surburban launches nowadays

So if we agree have 8 Rajah properly valued.
If these numbers are extrapolated from liquidity value :
(S$ mn)
Current Assets 348
Sale of 2 units 9.3
Less Current Liabilities -185
Less Non Current Liab - 16
Less Dividend Paid - 8.2 ( Stock ex divi post results)
Serangoon Indstl Plot (shown under PPE) 27
--------
175

So market is valuing core Retail & Publishing Business for S$ 41 mn. This business made PBT S$ 25-29 mn consistently or PAT of 21-25 mn. This business consistently makes Operating & Free Cash Flow & trades at 1.6-2x multiple. This is what you decide whether it is too low or high. If one removes excess cash, property development from Balance Sheet it actually makes very high ROCE though has low growth.

- Impairment loss of S$3.1m saw the fiscal first-quarter net profit of Popular Holdings fall 18.8% year on year to S$5.32m from S$6.56m.

what happened?

(12-09-2013, 11:06 AM)felixleong Wrote: - Impairment loss of S$3.1m saw the fiscal first-quarter net profit of Popular Holdings fall 18.8% year on year to S$5.32m from S$6.56m.

what happened?

The answer to your question can be found in the last few posts...

(12-09-2013, 12:17 AM)safetyfirst Wrote: Although i dont like popular for venturing into property, i think 8 raja which is selling at 1300-1400psf, for a freehold property isnt really that expensive, i would think it is quite a fair price compared to many surburban launches nowadays

it can be over priced, under priced, or it can be a fair price-whatever that means....

.....but, did it sell, dos it sell, will it sell....& when?

True everyone has a view whether 8 Rajah sells or not.

Lets value 8 Rajah at 10-20% discount on book value or whatever discount you like & then work out what the market is valuing its retail & distribution business. Lets take 20% discount for argument sake. So 8 Rajah which is shown on books at S$ 53.5 mn is worth : S$ 43 mn. This means market is valuing its retail & Publishing Business for S$ 51 mn.

Now look at the following numbers :

Capital Employed in Retail & Publishing Business : Fixed Assets less PPE for Serangoon : ( S$ 81 - 27) : 54 mn.

Returns on this business : PBT 24 mn last year & 29 mn in FY12.

Lets use 24 mn as base as its a fairly consistent amount. So using EBIT I say that this business makes 44% ROCE ( it was 57% last year). If you strip out Serangoon Property purchase then Capital Employed has not been going up for number of years. Any business which generates this kind of ROCE & does not require incremental capital : should trade atleast 2-4x capital employed. So I will argue that conservative upside of Popular (using 2x multiple) is : (54 *2) - 51 = 57 mn $ which means upside of 7 cents per share & 14 cents if I use 4x.

(15-09-2013, 03:33 PM)ashuro Wrote:

(12-09-2013, 12:17 AM)safetyfirst Wrote: Although i dont like popular for venturing into property, i think 8 raja which is selling at 1300-1400psf, for a freehold property isnt really that expensive, i would think it is quite a fair price compared to many surburban launches nowadays

it can be over priced, under priced, or it can be a fair price-whatever that means....

.....but, did it sell, dos it sell, will it sell....& when?

I suppose it will sell .....eventually.... and at the right price
Whether the sale will render a profit could be more relevant.
At the end of the day the property has been paid for and the company could posit as a property owner rather than a developer.

None in 8 Raja was sold in August 2013.

(16-09-2013, 01:46 PM)freedom Wrote: None in 8 Raja was sold in August 2013.

Yup, since launch till now, only 2 units sold to-date, not good at all (see attached)

I thought its marketing location map is a huge mistake, placing PIE right beside the development, when in actual there's another development "The Arte@Thomson" in between PIE & 8 Raja. Still its not within walking distance to any MRT station, so its not that attractive compared to other developments.