HupSteel

[pianist]

instead of selling pigs, maybe hupsteel may consider ways to increase rental income out from these investment properties mentioned..

[paullow]

dismal 1q13 result reported a couple of days ago. but seems like industrial land may be going to developed soon and plans should be announced soon. reqd the 2012 ar. i made a visit to 6 kim chuan dr. true enough, some activities were inside the huge run down warehouse. and there was a notice in.the front gate that piling machine was going in. this nearly 1 acre of freehold land is right in middle of kim chuan industrial estate. next door sits a 8 storey warehouse. and nearby goodland group building 8 storey building. this 6 kim chuan land was acquired for peanuts decades ago and the time may be ripe to unlock this value. nav of the stock is grossly undervalued. a back of table calculation shows that nav shd be at least 45-50c.

according to ar12, the investment properties include 6 kim chuan dr, 38 genting lane, 2 jn besar shophouses n 4 hoenam offices. these were acquired at least 20-30years ago and the last valuation was done in 1992.

looking at 6 kim chuan lane: (I am no engineer, pls also do your own research) if it follows the next door built up, it may be able to follow suit with about 20000sf x 8 storeys. bear in mind industrial prices are high at the moment and still on upward momentum, psf for newly built freehold space should be able to fetch maybe 800psf. so if a new storey replaces the disused freehold land, it might be worth in excess of 100M! Of course there is construction, material, building costs to factor into this. bear in mind also the the market cap of hupsteel is slightly more than 100m also.

hupsteel could sell it as freehold strata units with a canteen or foodcourt at the ground level, or lease it to reits to enjoy recurring income.

but still it is a huge potential waiting to be unlocked, taking into account that the cost of the land is very cheap 30yrs ago.

correct me if i am wrong or if i have been too optimistic in my calculations.

this is not a buy or sell call. pls do your own research.

[Willow_Will]

If my historical data is correct, (excluding 3QFY09, in middle of the GFC) Hupsteel's 327K profit (exclude fair value gain on available for sale financial assets) for 1QFY13 is the company's worst quarter in the past 10 years. If there is no improvement in the prices of steel, there is a high possibility of Hupsteel announcing a quarterly loss for 2QFY13.

In my opinion, it would be disappointing if Hupsteel had to rely on its investment properties rather than operations to prop up its earnings.

[paullow]

If my historical data is correct, (excluding 3QFY09, in middle of the GFC) Hupsteel's 327K profit (exclude fair value gain on available for sale financial assets) for 1QFY13 is the company's worst quarter in the past 10 years. If there is no improvement in the prices of steel, there is a high possibility of Hupsteel announcing a quarterly loss for 2QFY13.

In my opinion, it would be disappointing if Hupsteel had to rely on its investment properties rather than operations to prop up its earnings.

it did have a loss in 2000, 3yrs after the afc. so now is 3yrs post gfc. its about the samecycle repeating.

this is a real possibility. since its investment ppties curret value plus cash already exceed its market cap. so in essence, if onebuy the stock, u get the 70yr old steelbiz for free.

[camelking]

dismal 1q13 result reported a couple of days ago. but seems like industrial land may be going to developed soon and plans should be announced soon. reqd the 2012 ar. i made a visit to 6 kim chuan dr. true enough, some activities were inside the huge run down warehouse. and there was a notice in.the front gate that piling machine was going in. this nearly 1 acre of freehold land is right in middle of kim chuan industrial estate. next door sits a 8 storey warehouse. and nearby goodland group building 8 storey building. this 6 kim chuan land was acquired for peanuts decades ago and the time may be ripe to unlock this value. nav of the stock is grossly undervalued. a back of table calculation shows that nav shd be at least 45-50c.

according to ar12, the investment properties include 6 kim chuan dr, 38 genting lane, 2 jn besar shophouses n 4 hoenam offices. these were acquired at least 20-30years ago and the last valuation was done in 1992.

looking at 6 kim chuan lane: (I am no engineer, pls also do your own research) if it follows the next door built up, it may be able to follow suit with about 20000sf x 8 storeys. bear in mind industrial prices are high at the moment and still on upward momentum, psf for newly built freehold space should be able to fetch maybe 800psf. so if a new storey replaces the disused freehold land, it might be worth in excess of 100M! Of course there is construction, material, building costs to factor into this. bear in mind also the the market cap of hupsteel is slightly more than 100m also.

hupsteel could sell it as freehold strata units with a canteen or foodcourt at the ground level, or lease it to reits to enjoy recurring income.

but still it is a huge potential waiting to be unlocked, taking into account that the cost of the land is very cheap 30yrs ago.

correct me if i am wrong or if i have been too optimistic in my calculations.

this is not a buy or sell call. pls do your own research.

Happened to read a valuation report on a building in the same area. 81m for free hold building

[paullow]

and look at last saturdays straits times on industrial ppty prices going up 60% since last yr. hupsteel is sitting on goldmine of more than 1 acre of freehold industrial land. its just matter of time before the market realises this gem though downside is the steel biz which seemed to be going thru a rough patch.
it won't be audacious to think that a big fish would attempt to makan hupsteel wholesale for the sake of its freehold land holdings in a land scarce singapore.

[weii]

Dear paullow,
Do you know the plot ratio for the freehold land at 6 Kim Chuan Drive? This will determine whether Hupsteel is allowed to build an 8 storey warehouse. Is government approval required for freehold land before Hupsteel can proceed to build an 8 storey warehouse? What is your estimated construction cost for building an 8 storey warehouse? My estimate is $200 psf.
Do you know of any reasons why Lion Teck Chiang's steel business had a much better profit for the latest quarter? Is it due to different customer segment?

[pianist]

what is their steel business margin?

[paullow]

Dear paullow,
Do you know the plot ratio for the freehold land at 6 Kim Chuan Drive? This will determine whether Hupsteel is allowed to build an 8 storey warehouse. Is government approval required for freehold land before Hupsteel can proceed to build an 8 storey warehouse? What is your estimated construction cost for building an 8 storey warehouse? My estimate is $200 psf.
Do you know of any reasons why Lion Teck Chiang's steel business had a much better profit for the latest quarter? Is it due to different customer segment?

well, i don't have the answers to ur questions. please share it with other valuebuddies if u have the info. but physically, i see the 3 buildings in total, to its left, in front of it and behind it, being developed into 7-8storey buildings. in fact construction is on going for the building in front of it to erect a 7-8 storey building there, but i think that land size is smaller, maybe 6000-7000sf.

i am no engineer or expert land surveyer. the old buildings are all 3 stories(i think the old plot ratio allowed 3 stories) but the newer rebuilt ones are mostly 7-8 buildings.

[paullow]

hupsteel may be moving. someone bot 200lots n queueing for another 200lots at 19.0c. such illiquid counter like hupsteel doesn't take buying to make its price shoot up.
perhaps someone already got wind of its land redevelopment plans. this is a grossly undervalued counter with limited downside and immense upside. the garmen have been emphasing on development in the taiseng defu area.