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#31
No use comparing with Pan Hong. No doubt, the prospect of the property development is very attractive. However, the issues are with its opaque development plans and also execution risks.

There wasn't much revealed regarding its development except through its 2009 Circular that:
"...the Land be developed into a mixed-use development comprising shopping malls (with a cineplex and games centre), soho, offices, condo-hotel, international school, residential units and entertainment hub with restaurants, boutiques, cafes and bars of an international standard."

Seem like they are doing a lot of stuffs! But the constraint is we do not know their development mix. If 80% is meant for shopping malls, then the time frame for the cash flows stream will be much longer and the variables are more than just building and selling it off (i.e. residential). You have to look at ITG's ability to attract good tenants, whether they are leasing or selling off the shops, etc.

Not much is also known for the property location as well except that they are located at the "West of Liantang road, South of Hubei Road and East of Hudong Road" and they are based in the "Liantang Town, Nanchang County of Jiangxi Province". With a little Google mapping, I was able to locate the place, though not at the pinpoint location. Not the prime location which is along the Ganjiang River in Nanchang but it is pretty decently located near to the Chengbi Lake.

Currently, residential properties around the area are selling at RMB 6,500-7,500/sqm and these are the high-mid end kinds. Enlarging the area, other residential properties are selling close to RMB 5,000/sqm. You can get a glimpse of the standard of ITG's property under their 2009 Circular when they mentioned they expects a development cost of around S$150mln which will translate to around RMB1,600/sqm. Of course, these figures could be irrelevant given inflation and changes in the economy now but at least, we can infer it won't be some prime high-end contender but probably average standards.

Another thing is we do not know when their first selling phase will be. All we know is it will be completed by 2016/17. So those who long ITG are actually implying that they believe there won't be any hard crash in the Chinese property market till then. I do not know when the market will crash but my sensitivity analysis shows that (on an assumption of RMB3,000/sqm gross construction cost & an ASP of RMB5,000/sqm) the project cannot tank a hard fall of more than 40% in prices. So, if the market crashes before 2016, ITG perishes. And again, this is just a rough estimate as we do not know their development mix which all the more makes any estimation being unreliable.

Lastly, how is ITG going to finance the development? Even if their estimated development cost is true, it is still around S$150mln. As of now, they have only S$14mln in net cash. It seem like they will be leveraging more and may even issue equity financing means. No doubt, they can build by phases and then use the cash flow earned from the proceeds to finance the next phase and so on but again, the plans are opaque. As of now, equity dilution is still a possibility.

The recent disclosure over the arbitration is perhaps a glimpse of the project uncertainty ahead.
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#32
A comprehensive view from dzwm87. Let me chip in as a shareholder

First of all, i agree with dzwm87 on the "opaque development plans and execution risks". No much detail on FR/AR, I hope to get clearer picture on next AGM. Execution risks is the same as other property developer in China, on top of it, we need to factor in more risk as ITG is new in property development.

That explains the current market valuation given to ITG.Big Grin

But if the development plans is sound, and execution risks is much lower than we though, there may be a germ, right?

ITG got this unusual large piece of land (13.74 hectares) with a special price (S$23 million). What is the current market value? The land was pledged with local bank with value at least S$49 million (with loan of S$2.9 million with 6% of land).

At land cost of S$23 millions, it is approx S$0.14 per share (inc MI). At the valuation given by bank, it is approx S$0.30 per share (inc MI). The latest share price is S$0.142

The current development cost is supported by bank debt and internal resources

Well, ITG may perishes or it may prosperous. Base on my risk-reward study, i started with a small stake. I will continue to re-evaluate along with new info updated and small hints pick-up.

as usual YMMV

(vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#33
You are looking at sales when it should be profit. Only profit is considered when adjusting for a RNAV estimate.

And it won't be appropriate to just look at land because they won't be selling just the land away. They will be developing it into a residential-commercial mix property which means an X dollars of development cost will be incurred.

Unable to find any point of e-mail contact and it seem the only way to reach them will be via snail mail. Have you spoken to the mgmt before?
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#34
(26-12-2012, 10:39 PM)dzwm87 Wrote: You are looking at sales when it should be profit. Only profit is considered when adjusting for a RNAV estimate.

And it won't be appropriate to just look at land because they won't be selling just the land away. They will be developing it into a residential-commercial mix property which means an X dollars of development cost will be incurred.

Unable to find any point of e-mail contact and it seem the only way to reach them will be via snail mail. Have you spoken to the mgmt before?

No, i did not manage to speak to anyone from management. I will try my luck on next AGM.

I understand your points. The point i am making is cost of the land is cheap, and its value already more than double now. It forms the base value of ITG, together with its other investments.

Yes, i agree development cost needed to realize the full value of the land. Base on latest 1H2012 FR, the development cost incurred was approx S$12.4 million, fully funded via debts and internal resources.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#35
(26-12-2012, 05:57 PM)CityFarmer Wrote: But if the development plans is sound, and execution risks is much lower than we though, there may be a germ, right?

If this is not a Freudian slip, then I dun know what is. Big Grin

You are probably thinking of 'gem' but you sub-consciously typed out the word 'germ'. Why??

Maybe because as a vested investor, you are trying too hard to defend the merits of your investment

I'm vested with ITG since its IPO at 50c in 2000. My initial stake was small but I took the opportunity to average down before its 5-for-1 consolidation. My stake remain small and I really hope yr optimistic views does come into fruition.

However, my biggest concern is the involvement of the Goh brothers. Nothing they do seems to amount to anything. They took a moderately successful sport apparel retail chain and try to turned it into a e-commerce business just to jump on the dot com bandwagon of the early 2000s. eWorldsofsports was listed at 42c (there was some issue with its IPO when the manager bought some shares from the public tranche and misreported the substitution rate) Its now know as VGO corp and is languishing at $0.07 currently.

ITG was started around the same time. The Goh brothers always talked a good talk but their track record is pretty dismal. So based on that, I wont hold my breadth that ITG will ever amount to much.
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#36
(27-12-2012, 11:31 AM)lonewolf Wrote:
(26-12-2012, 05:57 PM)CityFarmer Wrote: But if the development plans is sound, and execution risks is much lower than we though, there may be a germ, right?

If this is not a Freudian slip, then I dun know what is. Big Grin

You are probably thinking of 'gem' but you sub-consciously typed out the word 'germ'. Why??

Maybe because as a vested investor, you are trying too hard to defend the merits of your investment

I'm vested with ITG since its IPO at 50c in 2000. My initial stake was small but I took the opportunity to average down before its 5-for-1 consolidation. My stake remain small and I really hope yr optimistic views does come into fruition.

However, my biggest concern is the involvement of the Goh brothers. Nothing they do seems to amount to anything. They took a moderately successful sport apparel retail chain and try to turned it into a e-commerce business just to jump on the dot com bandwagon of the early 2000s. eWorldsofsports was listed at 42c (there was some issue with its IPO when the manager bought some shares from the public tranche and misreported the substitution rate) Its now know as VGO corp and is languishing at $0.07 currently.

ITG was started around the same time. The Goh brothers always talked a good talk but their track record is pretty dismal. So based on that, I wont hold my breadth that ITG will ever amount to much.

Ha...Ha... Thanks for pointing it up. Psychoanalysis seems an interesting topic for my reading list Tongue

Appreciate the comments on Goh brothers, and i had heard similar story about them. It has been factored into my valuation model for ITG Tongue I wish to have a face-to-face with the Goh brothers in next AGM, to have a final assessment. What i am sure now is the Goh brothers is not as transparent as Mr Salleh from Second Chance Big Grin

ITG became interesting only on the land purchased, not on their existing business model. It is an asset play.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#37
The legal issue with Global Yellow Pages Limited continue.

http://info.sgx.com/webcoranncatth.nsf/V...B00354D91/$file/Announcement_Proceedings_Against_Promedia_Updates07022013.pdf?openelement
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#38
The company has just issued a profit warning for FY 2012 and said that the company is 'expected to report a loss for FY 2012"

SGX Announcement
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#39
(21-02-2013, 07:24 PM)lonewolf Wrote: The company has just issued a profit warning for FY 2012 and said that the company is 'expected to report a loss for FY 2012"

SGX Announcement

Yes, un-expected. Will look further into the report once announced, to see whether it is due to the property development in China
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#40
The announcement was vague. It did not specifically mentioned a gross operating loss. So maybe all these legal tussles in Spore and China resulted in higher administration cost and resulted into a net loss?
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