LTC Corp (prev. Lion Teck Chiang)

[dydx]

Just reviewed the latest FY10 (ended 30Jun10) AR, which makes interesting reading.....
http://info.sgx.com/listprosp.nsf/6c6be9...5000c45c9/$FILE/LTC%20AR2010.pdf

With NAV/share (as at 30Jun10) at $1.007, Lion Teck Chiang, based on the last done share price of $0.41, is probably one of the most under-priced stocks. The stock's intrinsic value should be quite a lot higher, as its main investment property - the freehold Lion Industrial Estate (comprising 4 buildings), located off Paya Lebar Road, right next to the new Circle Line/Macpherson MRT Station - alone should be worth a lot more than the $79.8m BV (see Note 4, Page 48, in the FY10 AR)....
http://www.streetdirectory.com/asia_trav...ite_53515/ [location map of Lion Industrial Estate]

Based on Chairman Cheng Theng Kee's comments in his latest Chairman's Statement, we can reasonably expect both the Steel Trading and Property Development divisions to deliver a steady performance in FY11.

Meanwhile, Lion Teck Chiang has declared a $0.0075/share Final dividend to reward shareholders.

[dydx]

Just checked my bank account and noted a nice credit from Lion Teck Chiang's $0.0075/share Final dividend for FY10. Feeling happy!

The asset coverage for this counter against its grossly under-priced share price continues to be so overwhelming!

[memphisb]

dxdy, I was browsing the AR and can't see cash in the balance sheet. Are the cash *park* under their investment properties?


edit: saw it at section 14, page 59

[ichiran]

Dydx-san,

Share price of Lion Teck Chiang has been climbing up nicely over the past week, as the market has started to take notice of the grossly undervalued assets of LTC, following the run up in Tuan Sing recently.

What do you think are the chances of LTC redeveloping or converting the Lion Industrial Estate to some other use?

Appreciate your views. Thanks!

[dydx]

Dydx-san,

Share price of Lion Teck Chiang has been climbing up nicely over the past week, as the market has started to take notice of the grossly undervalued assets of LTC, following the run up in Tuan Sing recently.

What do you think are the chances of LTC redeveloping or converting the Lion Industrial Estate to some other use?

Appreciate your views. Thanks!

I guess more and more people are beginning to realize the huge disparity between the high intrinsic value and the low share price of this counter. Given enough time, Mr Market actually would be able to think facts and rationally!

Bearing in mind the prevailing sky-high land prices in Singapore, what would you do if you were the owner of that huge plot of freehold land sited along the busy Paya Lebar Road where the very old Lion Industrial Estate is now sitting on.....
http://www.streetdirectory.com/asia_trav...ite_53515/

Of course, you would want to realize and maximise the value of that piece of land, likely through a re-development project for commercial use. For that, you would have to talk to the authorities to secure re-zoning approval for the land. To increase your chances and the value of the re-development, you would even want to talk to the owner (Hwa Hong Corp.) of the neighbour Singapore Warehouse building, with the view to combine the 2 plots of land for a bigger development. You may even want to get a 3rd-party expert property developer to come in as a joint-venture partner.

So there are many possibilities, and all these because of the good location of this piece of freehold land. However, we must be mindful that such a re-development project will take time and effort - and some luck as well! - to achieve.

[freedom]

the rental income from the industrial property is 1 mil for 1st quarter, so 4 mil annually.

80mil valuation should not include the land appreciation.

if they can't unlock the value of the industrial property, the valuation will be stuck here for quite some time.

[dydx]

if they can't unlock the value of the industrial property, the valuation will be stuck here for quite some time.

I believe the question should be "when" - and not "if" - the value of the huge plot of freehold land along Paya Lebar Road can be unlocked?

Meanwhile, we can expect Lion Teck Chiang's 2 other on-going businesses - trading/supply of steel materials to the local construction industry, and residential property development in Singapore and Malaysia - to bring in the recurrent profits.

[freedom]

if they can't unlock the value of the industrial property, the valuation will be stuck here for quite some time.

I believe the question should be "when" - and not "if" - the value of the huge plot of freehold land along Paya Lebar Road can be unlocked?

Meanwhile, we can expect Lion Teck Chiang's 2 other on-going businesses - trading/supply of steel materials to the local construction industry, and residential property development in Singapore and Malaysia - to bring in the recurrent profits.

I mean the company may not want to unlock it now or maybe costly to unlock it now?

[ichiran]

Dydx-san,

Thanks for sharing. What is the percentage of shareholdings/deemed interests in LTC held by the Cheng family?

Also noted that LTC's steel trading business is benefitting from the public sector civil work projects and steel prices expected to remain stable.

As for their property development business, though I like the fact that they are more of a boutique developer in the bungalow segment (hence unlikely to be affected by the government property measures), I'm not so sure how well their latest cluster bungalows at Crescent Road is selling and their profit margins seems quite low (given that they bought the 33,135 sq ft site at average of $860psf, and now selling each bungalow at $1k to $1.2k psf).

[guru]

Hi,
actually Tan Chong also owns a sizeable amount of properties around Singapore.