Sing Holdings

[kbl]

Good afternoon everyone.
163units Waterwoods sold. Left 210 units
http://www.executivecondominium.sg/Waterwoods.html

166 units Waterwoods sold. Left 207 units

[learner88]

We refer to your email on 7 March 2014.
 
The Company shares your concerns and appreciates your suggestions. Following requests received from a group of shareholders recently, the Board convened a meeting to discuss on the suggestions mentioned in the emails. We would like to assure you that it is the guiding principle of the Board that for every decision it makes, it should be in the best interests of the Company and all shareholders, and to ensure sustainability and continual success for the Company in the long run.
 
The Company’s share price has been moving upwards steadily for the past three years to a high of 52 cents before declining around July 2013 (please refer to the Company’s 3-year stock chart attached). The decline in the share price corresponds to the introduction of the Total Debt Servicing Ratio (“TDSR”) framework by The Monetary Authority of Singapore in end June 2013. The impact of the TDSR on the Singapore residential property market was harsh, which in turn resulted in the fall in share prices of companies with substantial exposure to this segment, of which the Company is one.
 
With regard to a share buyback scheme, the Board is of the view that the basic criteria is that a company must have cash in excess of its operational and expansion needs. A share buyback mandate, when exercised, may not address the under performance of the share price as seen in the case of some local property / construction companies where the effect on share price is minimal. In fact, share prices of some of these companies are lower than before the shares were bought back.
 
In the context of our Company:
 
1.      The Company’s core business of property development and investment is capital intensive. For long-term sustainability, the Company has to continue to expand its business amidst the tough market condition now. Even with external financing, much equity is needed to fund any acquisition and subsequently, the development and construction of projects. As such, ready funds are required to embark on any acquisition opportunities.     
 
2.      All our projects are funded through a mix of internal cash and bank borrowings. With the prevailing challenging market conditions, in order to withstand any downturn in the property market or the macro-economies as a whole, it is critical that a healthy cash balance is maintained to provide assurance to the banks for their continuous support.
 
3.      The Company is in a net current assets position. However, assets such as development and trading properties are relatively illiquid, especially in this challenging environment where sales are slow. Furthermore, the receivables due from The Laurels project will be required for payment of outstanding construction costs, income tax and for profit distribution to our 30% joint venture partner in the project.
 
4.      The Company’s cash position as at 31 December 2013 stood at about S$27 million, some of which were project accounts’ money with restricted use.
 
In view of the funding requirement as explained above and without a large cash float, the Board is of the view that it would not be appropriate for our Company to deploy its financial resources to embark on a share buyback scheme or to distribute a sizeable dividend, as these may curtail its ability for business expansion and compromise its financial position.
 
Notwithstanding the current property market condition, the intrinsic value of our Company remains strong. With this fundamental value in place, the Company believes that market forces will determine the fair value of the Company when market sentiments improve.
 
Yours sincerely

[ngcheeki]

Reply for CFO of Sing Holdings:

We refer to your email on 6 March 2014.

The Company shares your concerns and appreciates your suggestions. Following requests received from a group of shareholders recently, the Board convened a meeting to discuss on the suggestions mentioned in the emails. We would like to assure you that it is the guiding principle of the Board that for every decision it makes, it should be in the best interests of the Company and all shareholders, and to ensure sustainability and continual success for the Company in the long run.

The Company’s share price has been moving upwards steadily for the past three years to a high of 52 cents before declining around July 2013 (please refer to the Company’s 3-year stock chart attached). The decline in the share price corresponds to the introduction of the Total Debt Servicing Ratio (“TDSR”) framework by The Monetary Authority of Singapore in end June 2013. The impact of the TDSR on the Singapore residential property market was harsh, which in turn resulted in the fall in share prices of companies with substantial exposure to this segment, of which the Company is one.

With regard to a share buyback scheme, the Board is of the view that the basic criteria is that a company must have cash in excess of its operational and expansion needs. A share buyback mandate, when exercised, may not address the under performance of the share price as seen in the case of some local property / construction companies where the effect on share price is minimal. In fact, share prices of some of these companies are lower than before the shares were bought back.

In the context of our Company:

1. The Company’s core business of property development and investment is capital intensive. For long-term sustainability, the Company has to continue to expand its business amidst the tough market condition now. Even with external financing, much equity is needed to fund any acquisition and subsequently, the development and construction of projects. As such, ready funds are required to embark on any acquisition opportunities.

2. All our projects are funded through a mix of internal cash and bank borrowings. With the prevailing challenging market conditions, in order to withstand any downturn in the property market or the macro-economies as a whole, it is critical that a healthy cash balance is maintained to provide assurance to the banks for their continuous support.

3. The Company is in a net current assets position. However, assets such as development and trading properties are relatively illiquid, especially in this challenging environment where sales are slow. Furthermore, the receivables due from The Laurels project will be required for payment of outstanding construction costs, income tax and for profit distribution to our 30% joint venture partner in the project.


4. The Company’s cash position as at 31 December 2013 stood at about S$27 million, some of which were project accounts’ money with restricted use.


In view of the funding requirement as explained above and without a large cash float, the Board is of the view that it would not be appropriate for our Company to deploy its financial resources to embark on a share buyback scheme or to distribute a sizeable dividend, as these may curtail its ability for business expansion and compromise its financial position.

Notwithstanding the current property market condition, the intrinsic value of our Company remains strong. With this fundamental value in place, the Company believes that market forces will determine the fair value of the Company when market sentiments improve.

Yours sincerely
Tay Puay Kuan
CFO

[safetyfirst]

hey i have also received the same mail. haha, i was just wondering, is there a way to change management? Even if the whole business is liquidated, can easily fetch 50 cents per share

[cyc]

The Company believes that market forces will determine the fair value of the Company when market sentiments improve.

Another intepretation : When market sentiments deteriorate, the Company will rather let market forces to determine its worst value.

[Behappyalways]

anyone can forward our email and their reply to the media. Let's see if the media wants to pick up on this news. Minority shareholders trying to 'stand up' for themselves.

My personal view is that mgmt. treats us as bond holders rather than shareholders. But they decide on the interest on the 'bond'. They can have quarterly bonus while when come to dividend payout they are conservative. Why not convert to yearly bonus so that you might save some money on bonus if some employees quit during the year.

anyway anyone wants to draft a reply back to the company?

[CY09]

Understand the company's stand that at 27M, it is unable to issue special dividends or do share buyback, however with an impending 117M of receivables, the company will have 144M cash (inclusive of 30% JV for Laurels it does not own).

Perhaps shareholders should make it clear that we do not want immediate gratification. What we want is that the remaining receivables from the Laurels sale; a portion of it is given back to shareholders to do something about the depressed share price.

For the reply " cash is needed to fund outstanding construction costs." We can point out that :
a) The EC development is capable of self-funding (current sales proceeds [est $180M] now exceed the 112M construction contractor awarded to UE E&C),

b) the sale of the Robin project is capable of self-funding. This is because the company has already used cash to pay for the putting of the foundation etc. The cost of constructing Robin site is estimated $50M. If Sing Holdings only sells 50% of the project GFA at avg $2110 PSF, it will collect $42.8 upfront since foundation is ready. The remaining progress payment of up to $100M Mil (assuming a 50% sale success) is more than able to cover the construction cost from start to end.

Thus the assurance needed is that once the remaining Laurels proceed is collected, Sing Holding uses the 144M by setting aside 20M for land bidding, 5M for working Capital, 5M for contingency, 14M to pay down the remaining short term debts, set aside 30M for the profit distribution to our 30% joint venture partner (which I believe is more than enough), 50M for "acquisition opportunities and exploring opportunities overseas", and 20M to reward all shareholders of Sing Holdings (buyback or special div).

Will appreciate if fellow valuebuddies confirm the remaining 117M receivables shown on FY Balance sheet all belongs to The Laurels proceeds. If it is not, please highlight so that argument is recrafted

<still vested>

Edited: For easier understanding and clarity

[opmi]

anyone can forward our email and their reply to the media. Let's see if the media wants to pick up on this news. Minority shareholders trying to 'stand up' for themselves.

My personal view is that mgmt. treats us as bond holders rather than shareholders. But they decide on the interest on the 'bond'. They can have quarterly bonus while when come to dividend payout they are conservative. Why not convert to yearly bonus so that you might save some money on bonus if some employees quit during the year.

anyway anyone wants to draft a reply back to the company?

Don't anyhow forward private mail to newspapers or public.
May get into trouble. Although the letter quite neutral, it is
basically not courteous.

Property devt co has this problem:

Boom times - want money to expand
Bust times - want to keep money lower leverage

Those property developers that don't share fruits with
their shareholders, are doomed to be small coz no access to
capital markets when times are good.

[cyc]

Looks like the stock is approaching $0.35 again. After XD, it will be $0.335.
If the property market remains depressed for the rest of the year, a lot of investors will be losing money by staying vested in this counter. Instead of buying for capital appreciation, we are left collecting meagre amount of dividends.

[Behappyalways]

168 units Waterwoods sold. Left 205 units

Even at present price I am very tempted to buy more. Though the way the management responded gave me a tight slap I better not to. At present price the valuation is below the cost of Robin plot. Not to forget profits from Waterwoods....

Hope it will not fall else the temptations might be too great....

Looks like the stock is approaching $0.35 again. After XD, it will be $0.335.
If the property market remains depressed for the rest of the year, a lot of investors will be losing money by staying vested in this counter. Instead of buying for capital appreciation, we are left collecting meagre amount of dividends.