HupSteel

if we add the cash to the financial instrument, its ard 75m. so more than 10c/share is basically in cash.

With inflation rate at 3 to 4% per annum, the dividend yield (based on 0.5 cent dividend) at current market share price cannot even cover inflation ?

Am I right?

(28-04-2014, 04:55 AM)heifien91 Wrote:

(27-04-2014, 10:42 PM)corydorus Wrote: If we are going for dividends, why not Telcos, Reits etc. Why do we want to take in so much assumptions or risks into consideration to have all the stars align to achieve it.

I may miss something. Do enlighten.

Telcos and Reits, sure they do offer way better dividend yields but honestly are they safe? Telcos..the singapore telcos are way overvalued and lets be honest, the service they offer aren't really that great. People are turning to third party providers for internet, given their stability and high speeds. In terms of mobile network, I seriously feel that the Singapore telco model is not sustainable. I remember reading the article about how Singtel (was it?) wanting to charge whatsapp for singaporeans using it?

Reits. Their dividend yields are really good say 7-8%. I won't say they aren't undervalued since I'm not an expert at how to really value reits. However, the biggest thing i fear about reits is that its only good as long as the music continues playing. Once interest rates start going up, how reits would perform, I am not sure. I mean to quote buffett, 'only when the tide goes out do we know who are swimming naked.'

Now why hupsteel? I feel that with all the debate of whether the are able to sustain the dividend yield, it is definitely valid. But at least at this point in time, hupsteel is still very much undervalued given their land which is currently underdevelopment and due in june/july? Hence, to me the dividend yield is just sort of the amount I'm getting waiting for this undervalued gem to realise its fair value. Fair value mainly coming from unlocking the value of the land. To my knowledge the steel business they are in is extremely cyclical (based on all the past posts I have been reading in this thread from the other forummers that are much more knowledgable than me. Hence, if it does reverse, its more of a bonus to me.

This is probably why I would pick hupsteel over say reits and telcos any other day. Of course, it would be ideal that we are able to find an undervalued company whose core business is doing really well (eg kingwan) but there are only so many of such companies. the main reason why i feel hupsteel is out of the radar is because of how the core business doesnt seem to be doing well. i first turned down the company because of that until i started researching into the land they own.

(Vested)

SG Value Investor
http://www.sgvalueinvestor.wordpress.com

(14-07-2014, 07:50 PM)Curiousparty Wrote: With inflation rate at 3 to 4% per annum, the dividend yield (based on 0.5 cent dividend) at current market share price cannot even cover inflation ?

Am I right?

I think the bigger question is whether dividend yields are suppose to cover inflation rates in the first place.

If the management develops Kim Chuan to collect rental, then how can the real value be unlocked?
if the intent is to develop and sell, then the recent declining property sentiment (which is set to continue for a few more years) does not help.

(14-07-2014, 10:20 PM)Curiousparty Wrote: If the management develops Kim Chuan to collect rental, then how can the real value be unlocked?
if the intent is to develop and sell, then the recent declining property sentiment (which is set to continue for a few more years) does not help.

That really boils down to each and every individual's investing mandate. For deep value investors, I am indeed buying a dollar for 50 cents, just that this true value might take much longer to realise

(vested)

The key problem is CATALYST.
Companies can remained undervalued for years, even after u are no longer on this Earth...

(15-07-2014, 09:37 AM)heifien91 Wrote:

(14-07-2014, 10:20 PM)Curiousparty Wrote: If the management develops Kim Chuan to collect rental, then how can the real value be unlocked?
if the intent is to develop and sell, then the recent declining property sentiment (which is set to continue for a few more years) does not help.

That really boils down to each and every individual's investing mandate. For deep value investors, I am indeed buying a dollar for 50 cents, just that this true value might take much longer to realise

(vested)

What causes a cheap stock to find its value?

Benjamin Graham: That is one of the mysteries of our business, and it is a mystery to me as well as to everybody else.

[But] we know from experience that eventually the market catches up with value.

theasiareport.com

(16-07-2014, 08:03 PM)Curiousparty Wrote: The key problem is CATALYST.
Companies can remained undervalued for years, even after u are no longer on this Earth...

(16-07-2014, 08:03 PM)Curiousparty Wrote: The key problem is CATALYST.
Companies can remained undervalued for years, even after u are no longer on this Earth...

Like I said, it really boils down to each of our investing mandate. Once, I did think like you that each stock has to have a catalyst for the stock price to rise and hit fair value. However, after reading research papers based on statistical evidence and all, over the long run such stocks would just normalise back to the mean. That said, even if it were to remain undervalued for years, at least every night I can rest well knowing full well that I bought a stock with an adequate mos.

http://www.btinvest.com.sg/system/bti/pr...g28-29.pdf

Not good news for industrial market segment

***********

The government seems to be adopting a two-pronged
approach to calibrate the industrial property market.
While cooling measures were imposed to douse the exuberant
buying sentiment, measures were also put in place
to ensure that genuine industrialists’ needs are catered to.
To ensure that there is sufficient industrial space for
businesses, some 20.42 ha of industrial land (eight sites
on the confirmed list and five sites on the reserve list), catering
to both light and heavy industries have been provided
for under the IGLS programme slated for the first half
of 2014. To ensure affordability of land prices, these sites
have tenure of 30 years or less.
Anti-speculation measures imposed in 2013 have been
effective across the industrial sector. Although the authorities
have stated that they may consider lifting the SSD depending
on market conditions, we believe that this is unlikely
to occur in the immediate future. As such, buyers
seeking to enter the industrial market would likely be
long-term investors or end-users.
Measures like the TDSR have curtailed the number of
speculators seeking to take advantage of the current low
interest rate environment, by imposing stringent checks
on their outstanding financial obligations. Hence, going
forward, we would expect capital values of strata-titled
conventional industrial space to stabilise in 2014, while
the number of speculative subsale transaction would continue
to taper.

Revenue = 7690sqm x 10.76 x efficiency ratio (say 80%) x 762 PSF (based on 2013 freehold rate) = $50 mil.
(basis: Factory units with 60-year lease and freehold tenure were transacted at an average of $441 psf and $762 psf, respectively, reflecting increases of 5 per cent and 8.5 per cent from 2012. )

Total cost of land ($zero) + construction = $1650 (PSM) x 7690sqm x 1.2 (20% buffer for rising labor cost, cost overrun)= $15 mil
[Hupsteel is not in the business of construction. there might be cost overrun, etc]

NAV created from KC project = $35 mil / 616 mil = 5.7 cents.

The NAV (or revaluation gain) created from KC project is only a meager 5.7 cents, after waiting for a miserable 2-3 years

How many " 5.7 cents NAV gain" can we create from all the freehold properties that Hupsteel has and how long do we have to wait for all to be redeveloped?

we are looking at the RATE of NAV creation, relative to the existing NAV


*****************

The Board of Directors of Hupsteel Limited (the "Company" and together with its subsidiaries, the
“Group”) is pleased to announce that the Group has entered into an agreement (“the Building
Agreement”) to redevelop its freehold property at 6 Kim Chuan Drive (the “Property”) into a 7-storey
industrial building with an elevated car park having a gross floor area of 7,690 square metres.