Global Premium Hotels

[propertyinvestor]

does anyone know why now at this time cannot use local bank internet banking to apply for this ipo which closes at noon tomorrow?

ESA Services not available after 9.30. You have to wait for tomorrow morning. or try again at 11pm later

[pianist]

i see thanks

[MrValue]

Find the name of the company really contradictory..
They are certainly not Global w only SG hotels,
And they r certainly not premium!

Perhaps they shd be named Aspiring Global Premium Hotels ltd

[Vseeker]

GPhotel acquisition of SPV ("Fragrance Heritage Pte Ltd"), which hold the devt land site (at 165 and 167 Tyrwhitt Rd), from parent Fragrance Land for $25m.

my interpretation:
the announcements by both FragranceLand and GPhotels were scripted to make both set of shareholders happy and not get too excited.
Truth is that Fragrance Land won tender for this landsite for $52.11m only recently - on 30Dec2011 (< 5mths ago),
and now "reselling" it at $24.136m capital gains to GPhotel.

SO actual pricing for this development land site now, is actually based on market valuation of $78m.
==> the SPV is being transfer for $25m, but effective land cost to GPhotels will still be around $78m.
and at this price ($78m) and based on the max permissible GFA of 6762.6 sqM of the lands
=> it's priced at $1072 psfppr !! , so no discounts lah..
.. if only on DAY1, bigboss had tender, using an entity under the hotel biz division instead, then GPhotel will have saved $24m now, and dun need such a transfer.

rezoning comm to hotel: done before, v. likely will go thru unless got legitimate objections raised to URA.

site is only 200m from upcoming Bendeemeer MRT station (DTL), located just across Lavender St.

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most comparable recent URA hotel tender:
the site at Rangoon Rd/Farrer Park Station Rd awarded on 17-Apr2012 for $151.005m,
with max GFA of 13,004 sqM, that's $1079 psfppr

[pianist]

Global Premium Hotels’ revenue grew 19.6%
to S$30.1 million for 1H 2012
• Group average occupancy rate surged 10.5 percentage points to 90.7%
• Excluding one-off IPO expenses, 1H 2012 profit before tax increased 2.8%
yoy to $13.8 million
• Board declared interim dividend of 0.2 cents per share

[propertyinvestor]

GPH will always declare dividends since Fragrance depends on it for recurring cashflow

[pianist]

extract from recent announcement:.."As part of the on-going AEI to optimise asset potential and maximise returns, the Group embarked on refurbishing one of its oldest hotel, 168-room Fragrance Hotel-Ruby in early August 2012. The official reopening has been scheduled on 1 December 2012. The Group expects RevPAR for Fragrance Hotel-Ruby to reach optimal levels by early 2013 with higher average room rates post-renovation and the ramp up of AOR over December 2012. Mr. Lim Chee Chong, continued, “At Global Premium Hotels, we constantly innovate to stay ahead of the competition. Our desire to be the preferred hotel of choice drives us to come up with new ways to provide the best value and comfort. We are conscious of the options that
travellers have and will continuously look to enhance our facilities and services for the best of our customers.”
To differentiate from other economy-tier hotels, the revamped Fragrance Hotel-Ruby will offer the firstof-its kind concept of dedicating 2 executive floors to business travellers, at the same time, provide value-added services such as free Wi-Fi, Smart TV and even the option of selecting their pillow..."

[ikur1]

Valuation opinion:

if you only look at value of land, which keeps increasing
from AR 2012,

latest value of freehold and leasehold land is 725.5m + cash 15.3m
total liability in the book 525.6m

net worth of land ONLY is 215.2m

value of cashflow received from room let yearly assumed: 20m yearly, cap rate of 5%
value = 20/5% = 400m

total value is 400+215.2 = 615.2m vs mkt cap of 284m

any takers? possible issues?
I haven't taken into account the possibility of future interest rate rise tho, yearly cashflow may decrease substantially as their borrowings are huge

but so far looks like an undervalue counter in my opinion

[pianist]

why that formula dividing the yearly cashflow 20m by the cap rate 5%? what is cap rate?

[ikur1]

from wiki: http://en.wikipedia.org/wiki/Capitalization_rate
In real estate investment, real property is often valued according to projected capitalization rates used as investment criteria. This is done by algebraic manipulation of the formula below:

Capital Cost (asset price) = Net Operating Income/ Capitalization Rate

For example, in valuing the projected sale price of an apartment building that produces a net operating income of $10,000, if we set a projected capitalization rate at 7%, then the asset value (or price we would pay to own it) is $142,857 (142,857 = 10,000 / .07).

This is often referred to as direct capitalization, and is commonly used for valuing income generating property in a real estate appraisal.

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say u just stay conservative and value the 20m revenue at 8x = 160m

worth: 160m + 215m = 375m

still have margin of safety