Vibrant Group Ltd (Formerly: Freight Links Express Holdings)

[dydx]

Another grand financial engineered wholesale asset disposal deal (similar to what CWT did a few years back).....
http://info.sgx.com/webcoranncatth.nsf/V...90042A172/$file/Announcement_Proposed_Sale_And_Leaseback_Of_Properties.pdf?openelement [Sale & Leaseback Announcement]
http://info.sgx.com/webcoranncatth.nsf/V...90042FFE1/$file/Freightlinks_NewsRelease.pdf?openelement [Press Release]

Under the deal, the underlying fully-developed logistics property assets will remain the same, except that the assets will be transferred into a new Reit as its initiating assets, at 'inflated prices' not acheiveable in a normal trade sale, justified and backed by a likely higher-than-normal leaseback arrangement. As consideration, Freight Link will get a bundle of units in the new Reit and some cash. To pay for these assets, the new Reit will have to raise new capital via an IPO and also take on a considerable amount of new debts. Depending on the market response to the IPO, the Reit would pursue further growth by raising additional new capital via placement of even more new units and taking on more debts, to buy into additional matured property assets at likely higher-than-normal market prices, under similar purchase-and-leaseback deals.

Who and how many investors will buy into such a situation in exchange for promised consistent dividend returns crafted by smart financial engineers?

[d.o.g.]

Who and how many investors will buy into such a situation in exchange for promised consistent dividend returns crafted by smart financial engineers?

Apparently, the thousands of investors in REITs have already done so.

Most REITs have some exposure to sale/leaseback deals, some more than others. The newer ones like Cambridge and AIMS tend to have more of them as most of the good buildings were already taken by the older REITS.

The REIT itself could be a decent investment if bought cheap enough. But the company that sold its building to become a tenant is usually strapped for cash (otherwise why would they do a sale/leaseback?) and should be avoided.

The investor should also track how much of the REIT's NLA is made up of weak tenants. TT International for example was a sale/leaseback tenant for Ascendas, but accounted for only 2% of NLA so it was merely annoying instead of troubling when TT International ran into problems.

[brattzz]

how about airlines that does that, SIA does that too i think, sell and lease back their airplanes..

[pianist]

i remember some years ago super coffee mix also did a sale/leaseback arrangement for a building in the north

[EarnestLearner]

While I agree with d.o.g comment that the business has poor cash flows in the past, the sale of properties has injected a huge amount of cash to the company.

In their latest quarterly report, the cash is 99.4 million, which works out to be 0.045 cents.

http://info.sgx.com/webcoranncatth.nsf/V...40034F84E/$file/Freightlinks_3QFY11_Results.pdf?openelement

At current price of 0.05 cents, don't you find it a bargain?

Besides cash on hand, we have not included other investments the company has on its balanced sheet. Of course a problem is that the company seems to be buying a lot of unrelated businesses, which burn cash. But still the 0.045 cents of cash seems attractive!

Look forward to hear your comments on this? Thanks

Btw, I am new to investment analysis. Pls pardon me if I posted a silly question

[freedom]

most of its cash has been spent already...

so 4.5 cents of cash not valid any more.

[EarnestLearner]

Thanks Freedom.

I got it now. S$99 million is as at 31st Jan. Checked their announcement and see that in Feb 2011, they bought coal business in China at S$17.6 m & subscribe to some feeder fund for S$39 m. In May 2011, they invest in Australia's Blackgold coal business for S$15.5 m. Indeed the cash is depleting very fast.

Learn something there. Thanks again

[Nick]

Hmm they are following CWT into the coal biz ?

[Underdogger]

Isn't New Toyo a better buy?

http://www.valuebuddies.com/thread-638-page-35.html

3 components:-

1. Core business - cigarette packaging printing contracts with world's biggest tobacco players - BAT, PMI & others
[32 to 35 cents if valued at P/E of 10]

2. ShanghaiAsia Holding's sales of assets, of which New Toyo has 34% share - [13 cents]

3. Land holdings and investment properties, based on book value without any assumption of future redevelopment
New Toyo owns 54% of Tien Wah which is sitting on prime land in Petaling Jaya Section 13...
[>= 10 cents]
http://www.valuebuddies.com/thread-2082.html

It is only trading at 26.5 cents. It has consistently provided about 2 cents of dividends annually…

[VestedInterest]

Watching this counter closely. Ratios based on FY12 results look decent: EPS 1.43cents, NAV 7.99 cents, PE 4.5. There is also div pending of 0.45 cents, giving a yield of 6.9%. It's debt level is low and some of its investments are starting to bear fruit. Think Sabana REIT was a good move. Nowhere near CWT in terms of market leadership but the nos look better. Anyone any thoughts on this counter? Currently priced at 6.5 cents.