HupSteel

[brattzz]

I think hupsteel steel biz is not doing well locally.
I see that the management is planning to market its kim chuan ppty for rental soon, as well as refurnish its other properties in near-mid term.
With large cash horde, it shd be able to tide over this difficulty.

Yes sir, agreed on that. As long as HS uses it's internal funds, it will turn out ok, with potiential for upside upon steel market recovery, (not sure when!)

[FatBoi]

Is Paullow is active in VB? Is that you on #16 in twenty largest shareholders list? One position above Koh Boon Hwee. You really put your money where your mouth is. My eyes nearly popped out from the constant rubbing.

[TheMillennium]

Under Investment Properties:

If the revalued investment properties had been included in the financial statements at cost less accumulated depreciation, the
net book value of investment properties for the Group and the Company would have been $10,080,000 (2012: $10,151,000)
and $2,936,000 (2012: $2,913,000) respectively.

As at 30 June 2013, the fair value of investment properties is $78,500,000 (2012: $47,200,000) as determined by independent
professional valuers based on the properties’ highest-and-best-use using the Market Comparison Method, Residual Land
Valuation Method and Income Method.

All that is left now is for their business to pick up.

[FatBoi]

Under Investment Properties:

If the revalued investment properties had been included in the financial statements at cost less accumulated depreciation, the
net book value of investment properties for the Group and the Company would have been $10,080,000 (2012: $10,151,000)
and $2,936,000 (2012: $2,913,000) respectively.

As at 30 June 2013, the fair value of investment properties is $78,500,000 (2012: $47,200,000) as determined by independent
professional valuers based on the properties’ highest-and-best-use using the Market Comparison Method, Residual Land
Valuation Method and Income Method.

All that is left now is for their business to pick up.

The huge gap in year on year valuation already took into account the redeveloped 6 Kim Chuan Rd, is my understanding correct?

[Bibi]

Is Paullow is active in VB? Is that you on #16 in twenty largest shareholders list? One position above Koh Boon Hwee. You really put your money where your mouth is. My eyes nearly popped out from the constant rubbing.

Must be him Liao. So coincidental I have same name as him except the surname

[Underdogger]

I think hupsteel steel biz is not doing well locally. I see that the management is planning to market its kim chuan ppty for rental soon, as well as refurnish its other properties in near-mid term. With large cash horde, it shd be able to tide over this difficulty.

May I ask how much would the rental from Kim Chuan contribute to the current EPS?

Hupsteel NAV is still recorded as 32.44 cents . I assume this has not factored in the increase in fair value of its investment properties over the net book value ($78.5 mil - $10.08mil) or 11 cents ?

[gautam]

Hi underdogger, i am not sure. I don't see any layout plan yet. Also, the size looks decent enough for a food court at its ground floor. Maybe this will be announced at the coming agm.
But with seasoned investors like lck and kbh inside, i myself might load up some.
Good thread.

[FatBoi]

Hi Underdogger, the NAV has indeed not factored in fair value increase in investment properties (it is a disclosure item only; as required by financial reporting standards). Accounting policy-wise, Hupsteel had carried IP at cost less depreciation.

As the construction begins, what we can likely expect is the cost of renovations, improvements to be capitalised.

However, the unlocking of value for 6 Kim Chuan (in terms of positive impact onto financial statements) will not come from the reno but when two things happen (can be either, on a standalone basis):
(1) Increase in Rental income
(2) Gain on disposal

Can't see (2) happening in the near term. If I am management and wanted to sell it to unlock the value, I could have sold it now and interested parties will pay the market price anyway. Unless a Gareth-Bale like offer comes, I would keep this free-hold and max out its rental potential and milk it to diversify the core business which is cyclical.

What I am slightly unsure of is whether the S$78.5 million has already taken into consideration 6 Kim Chuan Road's value (in its future redeveloped condition).

Going to attempt and answer my own question. My suspicion is yes due to two points.
(1) Announcement of 6 Kim Chuan Road re-development happened on 19 April, that's in Q3 and definitely considered for year end too.
(2) The fair value disclosure stated the highest-and-best-use as basis to assess the valuation of the investment properties, so 6 Kim Chuan Road must be valued based on future redeveloped status.

[Underdogger]

Hi Underdogger, the NAV has indeed not factored in fair value increase in investment properties (it is a disclosure item only; as required by financial reporting standards). Accounting policy-wise, Hupsteel had carried IP at cost less depreciation. As the construction begins, what we can likely expect is the cost of renovations, improvements to be capitalised. However, the unlocking of value for 6 Kim Chuan (in terms of positive impact onto financial statements) will not come from the reno but when two things happen (can be either, on a standalone basis): (1) Increase in Rental income (2) Gain on disposal Can't see (2) happening in the near term. If I am management and wanted to sell it to unlock the value, I could have sold it now and interested parties will pay the market price anyway. Unless a Gareth-Bale like offer comes, I would keep this free-hold and max out its rental potential and milk it to diversify the core business which is cyclical. What I am slightly unsure of is whether the S$78.5 million has already taken into consideration 6 Kim Chuan Road's value (in its future redeveloped condition). Going to attempt and answer my own question. My suspicion is yes due to two points. (1) Announcement of 6 Kim Chuan Road re-development happened on 19 April, that's in Q3 and definitely considered for year end too. (2) The fair value disclosure stated the highest-and-best-use as basis to assess the valuation of the investment properties, so 6 Kim Chuan Road must be valued based on future redeveloped status.

Tks bro. Give and take , normally a 30% haircut is applied to RNAV. This will give about 30 cents for Hupsteel.

[gautam]

Well, if you are takimg a long shot of 10yrs or more, companies like pmdata, noel, liontc, hwahong, hupsteel with exposure to ppty market in paya lebar v likely will have a big revision to nav once plot ratio revises upwards.

since we are in this discussion,

if i could share some of my info after doing some digging over last weekend:

kong siang occupies a large plot of land, built up of some 145000sf freehold just done up in 2008, just next to hupsteel's. this is owned by the lee family. unlike to amalgate with hupsteel.

some pple believe that hwahong's 110 paya lebar can combine with lion tc to form a large complex which is just next to the MRT. but looking at the recent renovation at 110, makes it unlikely, at least for the near term. But if you look at who controls hwa hong, it is not mission impossible when the time comes.

Noel does have quite a number of industrial spaces near tai seng mrt, this should contribute to the upward revision of the nav. and same for pmdata. but not many people might want to invest in <50m cap companies.


feel free to add some info or correct my info.

gautam kumar