Popular Holdings

how long you think Popular can survive?
barnes and noble, books-a-million even Amazon are all loss-making
harris bookstore already closed down, borders group went bankrupt
seems we need to assign 0 value for their terminal value and that will hugely impact their valuation...

It is naive to simply link Popular to Barnes & Noble, Harris and Borders and make comments like assigning zero value for their terminal value. The business model and target market are not entirely identical. You will be surprised how many assessment and cook books they can sell.

From my last few trips to Popular, business seems pretty good and I had to even queue in line to pay for my purchase.

Personally, I think there is good potential for their business in developing markets in the region. Singapore does appear quite saturated but I think Malaysia and China could be game changers for them if they execute well.

(11-11-2014, 10:43 AM)sgpunter Wrote: It is naive to simply link Popular to Barnes & Noble, Harris and Borders and make comments like assigning zero value for their terminal value. The business model and target market are not entirely identical. You will be surprised how many assessment and cook books they can sell.

From my last few trips to Popular, business seems pretty good and I had to even queue in line to pay for my purchase.

Personally, I think there is good potential for their business in developing markets in the region. Singapore does appear quite saturated but I think Malaysia and China could be game changers for them if they execute well.

thanks for your argument, i was just playing devil's advocate. I think the company is cheap but not sure how they can unlock value.

I guess one reaspn why they are ündervalued" by the market is due to their poor track record in property development.If you look back at their past track record they sure aint pretty, and they keep burning cash this way.

(11-11-2014, 11:44 AM)nervesofsteel Wrote: I guess one reaspn why they are ündervalued" by the market is due to their poor track record in property development.If you look back at their past track record they sure aint pretty, and they keep burning cash this way.

Agree. They are the late comer and joint the party just when the music is about to stop. Moreover, they don't even have knowledge in property. I was hoping they could concentrate their resources in education area, maybe set up a tuition centre or join an established one, or something along that line.

(11-11-2014, 01:19 PM)Ben Wrote:

(11-11-2014, 11:44 AM)nervesofsteel Wrote: I guess one reaspn why they are ündervalued" by the market is due to their poor track record in property development.If you look back at their past track record they sure aint pretty, and they keep burning cash this way.

Agree. They are the late comer and joint the party just when the music is about to stop. Moreover, they don't even have knowledge in property. I was hoping they could concentrate their resources in education area, maybe set up a tuition centre or join an established one, or something along that line.

They are going along that line in terms of English tuition centres in HK or China if I didnt remember wrongly.

Yes, I agree the bugbear is property development especially in the current climate. Sales of their developments from URA: -

One Robin - Fully Sold
18 Shelford - 16/19 Sold
8 Raja - 2/26 Sold

Based on the above, I wouldn't say their track record is poor to be honest except for 8 Raja. During the property boom, I recall Popular's profit spiked but too bad, property market is looking down now and looks like they may be stuck with the 8 Raja units for awhile, probably until the next boom which nobody knows when.

I believe Popular had already recognised one off impairment losses on two 18 Shelford units in 1QFY14 results. I guess there may be additional impairment losses for 8 Raja and new development Permai Residences down the road.

Luckily their balance sheet is very strong and I think they should be able to withstand the property downturn easily. But yeah, property which was once a sweetener has turned sour for Popular which I think could be the reason for its low valuations.

One way to re-frame it is this:

Popular Holdings has has a lacklustre Property Development business. But does the impairment losses affect the real normalized earnings power of the company selling stationary and educational materials (which I find much more resilient, especially with the indicators coming out from the growth of the tuition industry in Singapore).

Regards,
theasiareport.com

Popular is the dominant retailer for stationaries.
The book sales that's making money is the course books for schools.
growth in malaysia seem to be growing steadily.
I've seen a few of their stores in malaysia, also have consistent queues.
The properties gonna sit there for a while.
They have the latest JV with BBC or something for learning centres in china, dunno how that will pan out
I rem the son used to be part of management/board then he was gone

vested

I view Popular's strength as a one stop shop for students and teachers for educational books/materials and its accompanying related stationery accessories. It has obviously tried to diversify itself into property, music (CDrama), lifestyle bookstores (e.g. Epilogue) with limited success, confusing consumers' prior image of Popular.

With the known size of the local tuition/learning market, perhaps the e-learning section (or educational dvds etc.) is an area that can develop and complement their existing strengths in the learning and educational space. They do have an elearning segment but am not sure how much have they invested in it.