Guthrie GTS

[Cloudman]

Date Stamp : 18 Feb 2013 - Up another 3 cents to close at $0.79 today on volumes of 3.2M traded

[dydx]

Date Stamp : 18 Feb 2013 - Up another 3 cents to close at $0.79 today on volumes of 3.2M traded

How I wish I can report the same rise in share price for Lee Kim Tah, Guthrie GTS's equal partner in the prime shopping mall asset, Jurong Point. However, one thing is quite sure: Should both companies decide to sell Jurong Point, the positive EPS impact on Lee Kim Tah will be 2x that of on Guthrie GTS, simply because the latter has approx. 2x in outstanding issued shares as compared with Lee Kim Tah.

[piggo]

Results pretty much within expectations... 3.25¢ dividends declared, payable on 21st may

[a74henry]

I share PIGGO views.

Based on technical charts, it faced sell down over the last few trading days. However, fundamentals are intact.
Management has acquired properties which should add to the recurring income going forward.

NAV of $0.91. Based on the MV of $0.75, a good safety margin. EPS of $0.12 means PE = 6.25 x.

I continue to like this counter and will add more to my portfolio at an appropiate price.

[pianist]

Which price is gd to enter?

[Wildreamz]

I have tried to assess the balance sheet of Guthrie GTS over the past 5 years. I noticed that a significant portion of their reported income is "Fair value gains of investment properties"; in fact, it is >50% of their reported EPS.

May I ask how is this calculated, and is it sustainable in the long term future?

[piggo]

If you look at the annual report for 2011 under Section 24, it details on the "Fair Value Gains of Investment Properties". They categorize their properties under "freehold", "leasehold" and properties for sale. The valuations are based on the open market value (by "professional valuers") at year end... as to whether it should be factored as part of earnings, I believe Second Chance AR kinda answers that

Your recent increase in profits is mainly from the surplus in property valuation and not from your core
activities.
Many shareholders still continue to perceive the gain in property revaluation as separate from profits. Probably
this could be due to it being unrealised.

.......

Of our three core businesses, property investment is the biggest contributor to Group profits. We invest in
properties not only for the rental income but also to benefit from capital appreciation, which becomes part of
the total profit or loss of the investment.

.......

The following drastic example should provide a better illustration:
Fifty years ago a bungalow was purchased for S$50,000/-. Today it is valued at S$5 million. Sold or unsold the
owner has made a S$4.95 million profit.

If you exclude the income from fair value gains of properties, their net profit margin's from 2006 to 2012's 9.9%, 9.5%, 7.7%, 15.2%, 16.0%, 34.1%, 15.2%... Not looking at 2011 due to the one off gain, 2012's margins are consistent with the previous years.

EDIT:
Actually the NAV in the recent results is 0.97 right? Which based on current prices is a discount of ~22%

Based on my own calculations, they've been trading around PE6 the past couple of years with an average price/asset ratio of ~66%... So a discount of 22% seems quite fair with not much "margin of safety". Then again there are hardly any 'cheap' companies around these days and I think suburban commercial properties looks good with the projected 6.9m population

[Wildreamz]

...
The valuations are based on the open market value (by "professional valuers") at year end... as to whether it should be factored as part of earnings, I believe Second Chance AR kinda answers that
...
If you exclude the income from fair value gains of properties, their net profit margin's from 2006 to 2012's 9.9%, 9.5%, 7.7%, 15.2%, 16.0%, 34.1%, 15.2%... Not looking at 2011 due to the one off gain, 2012's margins are consistent with the previous years.

I see now. Thank you very much.

In my opinion, while "Fair value gains in investment properties" could be considered part of earnings, I guess; some discount have to be given for future earning estimates under this section.

The current PE ratio of 6.1x doesn't look quite as attractive as it used to be.

[yeokiwi]

The current PE ratio of 6.1x doesn't look quite as attractive as it used to be.

PE is normally not a good measurement of property company.
For these companies, most people will work out a NAV based on their own valuations.

Eg.. Since JP is one of the main assets of Guthrie..
$A = How much was JP valuated in 2011?
$B = How much do you think it worth??

$B - $A will either get you a positive or negative no. If it is positive, there is some hidden valuation that is unrealised yet while if it is negative, then the property is over-valuated.

You can go one round and start to estimate all the properties of Guthrie.
With the final NAV, you can decide whether Guthrie is a buy or sell.

[piggo]

It's a consistently growing company with more than 4% yield... With businesses focused around this region. I also like how a significant portion of their income is recurring, rental, membership fees etc etc. Not easy to find a comparable these days.

Their properties are quite hard to value independently, so I guess their reported NAV is a good gauge.