Lee Kim Tah Holdings

[dydx]

LKT and Guthrie CTS both have good "Hidden Value" in JP but if the major share holders do not attempt to unlock it, we will be trapped in to a "Value Trap" for very long time, but i think there are higher chances for the LKT "hidden value" will be unlocked before Guthrie CTS.

Do you think when the controlling shareholder Lee Family bought more LKT shares and paid $0.535/share recently, or for India International Insurance Pte Ltd.....
http://www.iii.com.sg/index.cfm?GPID=9
to continue holding a 3.84% interest in LKT as a long-term investment, each or both of them are concerned about what you called "Value Trap". Not at all, I think. Instead, I guess they simply see a lot of - and growing - value in holding on to their LKT shares.

If a buyer willing to offer a very good price for JP comes knocking, and both LKT and Guthrie GTS together decide to sell, do you think Mr Market would still allow interested investors to buy enough of LKT shares at a good price after the transaction is concluded and announced? In the same sense, if the Lee Family decides to offer a premium exit price to privatize LKT, do you think they will provide minority shareholders a clear forewarning about their intention? No way!

[brattzz]

The full value of jurong point will be realised when the Jurong Lake District comes up strongly in 2015 onwards... BUT there is still a risk here, lakeside mrt is surrounded by pte properties, which leaves, Chinese Garden MRT, there's plenty of land around this MRT station... and it's close promixity to jurong lake...
Another player, eg, SPH (deep pockets) can come in and develop this area... this will have direct impact on Jurong Point...

We are talking about hi-tech / light industrial buildings, coupled with offices, bouqitue shops, international school, plenty of shopping, bread and butters items and of cos, pte properties with lake theme parks..etc...

Best plan is for LKT or Guthie to place JP into J-REITS, free up the cash, and buy up the landbanks around Chinese Garden now....with ownership of this stretch of land, they can effectively control and intergrate this "competition" into an allied partnership. Jurong Point will sit strong from there.

sounds like monopoly game leh!

[brattzz]

today up to 56.5cts liao...

[dydx]

On 7Jan11 (yesterday, a Friday), The Edge Singapore published an article (re-produced below) entitled "Jurong Point plays" which has given a glimpse on the current market valuation of this prime shopping mall asset, as well as the possible intentions of Guthrie GTS and LKT as the joint controlling owners of the mall.

I believe JP1 and JP2 together should be worth quite a lot more than $1b (as quoted in the article), as the carrying BV of LKT's shares in the property already amounted to $470.0m as at 30Sep10. As well, the article did not touch on the very substantial enhanced value of the huge plot of freehold development land in SIPCOT Information Technology Park, Siruseri, Tamilnadu, India, in which LKT has a 74.51% stake.

"Written by Goola Warden
Friday, 07 January 2011 22:05

GUTHRIE GTS and Lee Kim Tah Holdings are two retail mall plays which are trading below their net asset values. At 50 cents, Guthrie is trading below its NAV of 66 cents, at a price-to-book ratio of 0.75 times. Lee Kim Tah’s book value is 62.7 cents, and it is trading at a price-to-book of 0.9 times. The two companies own a 50% stake each in Jurong Point I, and a 25% stake each in Jurong Point II.

In a research note on Jan 7, Kim Eng Research raises the possibility of Guthrie GTS unlocking value of Jurong Point via a REIT. Following the completion of Jurong Point II, Jurong Point I and II together is Singapore’s largest suburban mall with a nett lettable space of about 750,000 sq ft, housing 450 shop units and adjacent to Boon Lay MRT station and a bus interchange.

According to Lee Kim Tah’s latest annual report, with the opening of the new bus interchange, Jurong Point’s shoppers’ traffic is now averaging 3.6 million per month. Lee Kim Tah says URA’s plans to remake the region into “Jurong Lake District” comprising Jurong Gateway and Lakeside in the next 10 to 15 years should also benefit Jurong Point. Jurong Gateway will have new offices, hotels, retail and entertainment centres and more homes and Lakeside will be the focal point for young families with a variety of tourist attractions and water-related sports. In June last year, Lend Lease paid $749 million for a 19,124.5 sq m (205,856 sq ft) white site at Jurong Gateway Road.

Kim Eng estimates that Jurong Point I and II together are worth around $1 billion, based on the average market price of suburban retail malls. “One way to unlock the value of Jurong Point I&II is via a spin‐off into a REIT,” the report says. Apart from a lift via capital recycling, Kim Eng makes the case for recurring income through its property fund management.

In addition to the stake in Jurong Point, Guthrie owns 50% of Heartland Mall and 20% of Tampines 1. It too manages Singapore’s newest mall nex, and through minority stakes in two funds Asia Retail Mall Fund and Asia Retail Mall II Fund, has shares in White Sands, Hougang Mall, Century Square, Liang Court, Tiong Bahru Plaza and Central Plaza.

Most property funds have a finite lifespan and Kim Eng believes that the Asia Retail Mall Funds may be looking for an exit strategy for its investors. “The retail malls here are currently enjoying strong occupancy rates and shopper traffic, and the time seems ripe to unlock value for investors through a securitisation,” Kim Eng says.

Other retail mall plays trading below NAVs are Suntec REIT trading at a price-to-book of 0.78 times and Starhill Global REIT trading at a price-to-book of just 0.68 times, the cheapest retail mall play."

[Nick]

Kim Eng released a research report on Guthrie yesterday - http://www.remisiers.org/cms_images/ssu07012011ke.pdf

(Not Vested)

[dydx]

From the active buying interests shown on both Guthrie GTS and LKT this morning (10Jan11), it certainly appears that more and more investors now understand the superb investment value and qualities of JP, and the 2 corporate owners of this PRIME retail mall property. It also appears that some investors are betting that a transaction on JP may be imminent. Perhaps it is timely to review that latest result announcements of Guthrie GTS and LKT.....
http://info.sgx.com/webcoranncatth.nsf/V...90032568B/$file/A_3Q2010Results_121110.pdf?openelement [Guthrie GTS]
http://info.sgx.com/webcoranncatth.nsf/V...8002F90AE/$file/September2010Results.pdf?openelement [LKT]

Based on the 1077.938m issued shares (as at 30Sep10), and the last done share price of $0.535 (vs. NAV/share of $0.66 as at 30Sep10), Guthrie GTS now has a market cap. of approx. $576.7m.

For LKT, based on the 505.443m issued shares (as at 30Sep10), and the last done share price of $0.615 (va. NAV/share of $0.6267 as at 30Sep10), market cap. now stands at approx. $310.8m. A transaction on JP and on LKT's stake in JP that is at say a premium of $50.0m above its corresponding BV, will have a positive impact on LKT's EPS and NAV of an approv. $0.10/share. For that matter, every $50.0m additional premium realised on LKT's stakes in JP or the development land plot in SIPCOT Information Technology Park (in India), will have a positive impact on EPS and NAV of approx. $0.10/share.

When compared with Guthrie GTS, there is a major difference in LKT as a counter in that it requires only very little market capital to raise the share price - already up $0.05 this morning with only 169 lots done!

[lonewolf]

I'm wondering if the just announced Tuas extension will impact Jurong Point when it starts running. The only reason why Boon Lay interchange is so crowded all day is because of the feeder network fetching workers to/from their workplace in the Boon Lay/Tuas area. Once the train starts running, I will assume at least 30% (conservatively) can by-pass Boon Lay interchange and proceed straight to the East. So with a drop in human traffic, surely it will eventually hit Jurong Point in term of occupancy and rental??

Of cos that at least 5 years away, so no need to over-analysis now but perhaps worth bearing in mind.

(Not vested in Lee Kim Tah or Guthrie)

[dydx]

Based on the current rental rates - running at $10.92m/quarter, or approx. $44.0m/year - see Note 1, p3, of the latest Q3-FY10 results announcement.....
http://info.sgx.com/webcoranncatth.nsf/V...8002F90AE/$file/September2010Results.pdf?openelement
- LKT would have collected approx. $220.0m in gross rentals in the next 5 years on its shares of JP1 nad JP2!

We have to also bear in mind Jurong is a large area and has a growing population catchment. Already with the main bus-interchange in Jurong integrated into the mall, JP should continue to serve as the main MRT-bus connection point in Jurong for many years to come.

When the MRT Tuas extension is finished and running in 5 years' time, people who travel from other parts of Singapore to Jurong to work in factories/offices nearby the new MRT stations will likely use the MRT and avoid JP. As well, some residents in Jurong may find it more convenient to travel to the new MRT stations to catch the train for other parts of Singapore, thereby also by-passing JP. Apart from these 2 groups, and unless another large shopping mall is built along the MRT Tuas extension, JP should remain as the main connection point in Jurong and the best place to meet, eat and shop.

However, I think we should all learn from this change that even a well-positioned shopping mall has a certain economic life, and its fortune may change over time due to market/population dynamics or a change in the transport infrastructures supporting the flow of visitors/shoppers.

[brattzz]

The 4 new Tuas MRT no fight for Boon Lay MRT, Tuas is a ghost town on Sat/Sun/Public holidays.... Main draw is still Jurong point.

[pianist]

edwin lee bought at 0.59 today 10 lots