Eastern Holdings

[smallcaps]

http://info.sgx.com/listprosp.nsf/5ec09b...d0028981d/$FILE/44870442.pdf/Eastern%20Holdings%20Ltd.%20Circular.%2013%20July%202012.pdf

Extracted from the above 'CIRCULAR TO SHAREHOLDERS in relation to the VOLUNTARY UNCONDITIONAL CASH OFFER' document:

7.1.3 Revalued NTA of the Group as at 31 March 2012 against the Offer Price

No. 81 & 83 Grove
Drive Singapore
279120/22

Market Value = 34.2 mil
Potential tax liabilities = 0.274 mil
Revaluation surplus 1.34 mil

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So let's see whether Grove Residence can match the above valuation when all the units gets sold.

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Some impt assumptions extracted from the doc:

The revaluation surplus is calculated as the difference between the market values of the properties in their
existing state (net of 1% agent commission for Singapore properties and 2% agent commission for Mongolia
properties) and their corresponding book values in the audited financial statements of the Group as at
31 March 2012. The revaluation surplus is stated net of potential tax liabilities.

The potential tax liabilities are computed by the Company assuming the hypothetical sale of the relevant
properties at Singapore’s corporate tax rate of 17%.

Includes estimated construction cost and professional fee of S$7,704,000 and S$539,280 respectively.

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Grove drive development was written down by 3.4 mil in FY12 and thus the book value of grove residence as implied above is already net of that write-down.

[smallcaps]

1H (ended 30Sep12) result makes interesting reading.....
http://info.sgx.com/webcoranncatth.nsf/V...600316413/$file/EHL-Ann-1HFY2013Results.pdf?openelement
A $1.94m realised gain from sale of investment properties boosted PBT and NP; the related proceeds of some $11.0m boosted gross cash and have put Eastern Holdings in a clear net cash position in excess of $19.0m - equivalent to approx. $0.064/share - as at 30Sep12.

It is relevant to note that Easterm Holdings continues to pare its large investment properties portfolio - many items of which are carried at ultra-conservative historical costs in the B/S - which should lead to a further increase in net cash. I thought this is a rational move by the management. Does it mean that some 'jumbo' dividends will be paid in the foreseeable future?

Just did some estimations based on asking price for the major investment and development properties:

Completed properties

EPL Building : 28 mil
Tras Street (4x shophouses) : 28 mil
Bryton House (70% interest of 33 mil) : 23.1 mil

Gross Cash if sold : 79.1 mil

Properties under construction

Grove Residences (6x semi detached) : 39.7 mil
Minus construction cost (estimated @ 400 psf of 24.4k built up area) : 10 mil

Gross Cash if sold and completed : 39.7 - 10 = 29.7

Total Gross Cash : 108.8 mil
Minus a buffer (15%) : 92.5 mil

Plus the existing net cash mentioned by dydx : 92.5 + 19 = 111.5 mil
vs Market Cap @ 18 cents : 54 mil

Just an update to guess how much is the net cash currently, including investments in the income funds.

Assuming the cash proceeds from selling of the investment properties were not reinvested (except for the income funds).

Also assuming Tras sale has been completed which is probably soon, if not already)

Net Cash 1HFY13 = 19 mil
Assets held for sale = 4.8 mil
Cash from Tras sale = 25 mil

Total guesstimated net cash plus funds = 48.8 mil = 16.3 cents

Based on 18 cents price, net cash / price = 90%

Probably the down payments from Grove Residence would bring it to mkt cap.

Just need another big sale for net cash to break through the mkt cap convincingly...

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EHL was dunno why mentioned in 联合早报 together with a number of other property counters, regarding revenue coming from PRC:

http://house.65singapore.com/hnews/jdzx/14406.html

Also found an old 2007 chinese article on EHL:

http://www.housingbbs.com/sg/Home-Family...5-1-1.html

"公司将推出坐落在小林通道(Grove Drive)，占地约2万零457平方尺的聚落式洋房(cluster bungalow)或聚落式半独立式洋房(cluster semi-detached house)"

In the end, turns out to be non-cluster loh...

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There is this doubt that I have, hoping fellow buddies can help shed some light on it.. Thanks!

It's regarding this:

http://info.sgx.com/webcorannc.nsf/Annou...endocument

The above is when ST's direct shares were transferred to the Offerer (MBT HOLDINGS).
In the announcement, it was stated:

(2) Mr Stephen Tay Thian Boon’s direct interest includes 88,200,000 shares which have been pledged as security to a financial institution licensed in Singapore for loans which he has taken out or utilised.

I understand that the encumbrance was in connection to the Offer, but after this announcement, could not find any other indication as to whether the shares are still encumbered... Does this means that the shares are no longer encumbered or maybe no need to announce since it's through deemed interest?

[opmi]

123,832,500 shares is pledged under DBS Nominees. About 40%. The other 40% still in MBT own name.

ST basically borrowed the money to buy the 20% that accepted the 18 cents offer. He is not that cash rich. Guessed from his salary and dividend paid. And the big house he has in Bukit Timah.

[smallcaps]

123,832,500 shares is pledged under DBS Nominees. About 40%. The other 40% still in MBT own name.

ST basically borrowed the money to buy the 20% that accepted the 18 cents offer. He is not that cash rich. Guessed from his salary and dividend paid. And the big house he has in Bukit Timah.

Thanks for the quick reply. Maybe he can give special dividend then he can be cash rich and repay the loan, hehe. EPL no lack of cash currently...

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Maybe that's why he's selling all the investment properties? Become a cash company?

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Just checked out what u mentioned. Yep, it's pretty big at 14,338 sqft. Maybe worth more than 15 mil now...

[opmi]

EPL has too much cash that it has to invest $20m into unit trusts before the FY2013 ending 30 March.
Or else minority shareholders will KP why no div. Hahahhaha.

[opmi]

123,832,500 shares is pledged under DBS Nominees. About 40%. The other 40% still in MBT own name.

ST basically borrowed the money to buy the 20% that accepted the 18 cents offer. He is not that cash rich. Guessed from his salary and dividend paid. And the big house he has in Bukit Timah.

Thanks for the quick reply. Maybe he can give special dividend then he can be cash rich and repay the loan, hehe. EPL no lack of cash currently...

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Maybe that's why he's selling all the investment properties? Become a cash company?

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Just checked out what u mentioned. Yep, it's pretty big at 14,338 sqft. Maybe worth more than 15 mil now...

DBS can continue to finance him coz interest cost is affordable. So no urgency to repay the share financing loan. Unless DBS says O$P$.

I guess ST basically think property market upside limited so selling the inv properties. Despite all his patterns, ST quite OK in timing the property market.

[smallcaps]

123,832,500 shares is pledged under DBS Nominees. About 40%. The other 40% still in MBT own name.

ST basically borrowed the money to buy the 20% that accepted the 18 cents offer. He is not that cash rich. Guessed from his salary and dividend paid. And the big house he has in Bukit Timah.

Thanks for the quick reply. Maybe he can give special dividend then he can be cash rich and repay the loan, hehe. EPL no lack of cash currently...

---

Maybe that's why he's selling all the investment properties? Become a cash company?

---

Just checked out what u mentioned. Yep, it's pretty big at 14,338 sqft. Maybe worth more than 15 mil now...

DBS can continue to finance him coz interest cost is affordable. So no urgency to repay the share financing loan. Unless DBS says O$P$.

I guess ST basically think property market upside limited so selling the inv properties. Despite all his patterns, ST quite OK in timing the property market.

Seems quite x to me... checked OCBC and it appears to be 6.5% for small caps (Grade 3 loan):

http://portal.iocbc.com/Accounts/share-f...riced-loan

If he borrowed $6.5 mil (36 mil shares x $0.18), then every year need to pay 400k leh. Seems significant for one who is concerned about the cost that EHL incurs for each sgx announcement made. So why not just repay the loan?

If no $$$ to repay, then give 2.6 cents dividend loh and get back $6.5 mil... hehe

On another note, maybe after all the properties get sold, EHL can cease being a property company and become a logistics company (selfstore). Then once the selfstore also sell off, can go back to being a publishing company (a bit smallish though).

[opmi]

If still got chance to privatise the company, unlikely EHL will pay out another dividend this year.
Why encourage the minority investors to hold onto their shares?

What is $400k, compared to $10m potential profit (NTA - Mkt Cap at 18 cts)???