LHT Holdings

[cif5000]

LHT's investment property at 44 Sungei Kadut Street 1 has been independently valued to have a CMV of $10.0m (vs. BV of $6.932m as at 31Dec11), and this throws out a $3.068m valuation gain.....
http://info.sgx.com/webcoranncatth.nsf/V...E00330B9E/$file/LHT-Holdings-44-Sg-Kadut-St-1-Valuation-final.pdf?openelement

Based on LHT's 212.98m outstanding issued shares, this valuation gain should add $0.0144 to per share NAV, which should hit approx. $0.18 as at 31Dec11. We will have confirmation of this when the company releases its FY11 full-year results by 29Feb12.

The investment property was carried at
Dec 2010: $5.2m
Jun 2011: $6.1m
Dec 2011: $6.9m
For FY11, there will be already a $1.7m revaluation gain without considering the independent valuation. If the property is carried at $10m, the valuation gain will be $4.8m.
[edit: I forgot to include the capex for improvement. Revaluation gain will be lower.]

What was not mentioned is the valuation of the owner occupied building across the street. How much is it worth?

Some clues.
1. The building is stated at cost less depreciation.
2. When LHT reclassified 44 Sungei Kadut St 1 into investment property in 2007, the carrying value was only $1.85m. Today it is valued at $10m.

Answer: Significantly more.

[dydx]

From Note 5 (Investment Property) of LHT's latest FY10 (ended 31Dec10) AR.....
http://info.sgx.com/listprosp.nsf/07aed3...0000bcef3/$FILE/LHT%20AR2010_LOWRES_a1.pdf
we know that:
1. The property at 44 Sungei Kadut St. 1, S'pore 729349, has a land area of approx. 35,281 sq.m. - and this is huge! - and its 25-year land tenure will expire in 2025 (i.e. 13+ years to go).
2. In FY10, the property derived a total rental and service income of $1.973m (+14.6% yoy over a total income of $1.721m in FY09), and $0.593m was spent on direct operating expenses (including repaid and maintenance), giving a net yearly income of $1.38m.
3. As at 31Dec10, the property was carried at a BV of $5.193m, and this figure included a capex of $1.793m incurred in FY10. As at 31Dec09, the property was carried at a BV of $3.4m, which included a $1.502m fair value gain recorded and captured in the P&L in FY09.

From LHT's 1H-FY11 results announcement....
http://info.sgx.com/webcoranncatth.nsf/V...A003CC743/$file/LHT-Half-Year-Results-30June2011-FINAL.pdf?openelement
we know that as at 30Jun11, the BV of the property has gone up to $6.066m, after accounting for a further $0.873m in capex incurred in 1H-FY11.

From the latest announcement dated 8Feb12.....
http://info.sgx.com/webcoranncatth.nsf/V...E00330B9E/$file/LHT-Holdings-44-Sg-Kadut-St-1-Valuation-final.pdf?openelement
we know that as at 31Dec11, the BV of the property has gone up further to $6.932m, and from this figure we can derive that a further capex of $0.866m was incurred in 2H-FY11.

A relevant question: Is the latest independent valuation (presumably checked by LHT's external auditors and IDs) of the property at $10.0m reasonable and realistic? Assuming after all the recent capex the property is now able to derive a slightly higher net yearly income of say $1.5m (just 8.7% higher than the net yearly income of $1.38m in FY10) for its remaining tenure till 2025, this asset should be bringing in a fairly predictable total cash net income of at least $20.0m over the coming 13+ years. On this basis, I suppose the latest valuation of $10.0m is reasonable and realistic. We should also bear in mind that based on a value of $10.0m and a net yearly income of $1.5m, and LHT's 212.98m outstanding issued shares, we can attach to this investment property a per share value of approx. $0.047 and an EPS of $0.007, which rationally should be used to pay out recurrent dividends to shareholders.

[RBM]

Today Mr. Market seemed to like the property valuation update provided by LHT. Share price was up over 14% to close at S$ 0.11 in pretty decent volumes (524,000 shares were traded) - about twenty times the recent average daily volume. Good to see some liquidity here. LHT's results announcement at end February is one that I'm looking forward to. Like dydx, I would hope that, based on rational grounds, we'll see some higher dividend levels announced............ and sustained.

Vested,
RBM

[dydx]

Today Mr. Market seemed to like the property valuation update provided by LHT. Share price was up over 14% to close at S$ 0.11 in pretty decent volumes (524,000 shares were traded) - about twenty times the recent average daily volume. Good to see some liquidity here. LHT's results announcement at end February is one that I'm looking forward to.

I hope Mr Market is motivated by more than just the property valuation update. From the chart, LHT's share price has been inching upwards since mid-Dec11, but with little volume, mainly because the shares are quite tightly held. It is indeed good to see some volume now, bearing in mind LHT's free-float is approx. 40% (or approx. 85.0m shares).

At today's close of $0.11, Mr Market is attaching a value at 61% of LHT's projected 31Dec11 NAV/share of approx. $0.18 - i.e. still with a large 39% discount. Based on the 212.98m outstanding issued shares, LHT's market cap. now stands at $23.4m. Taking out $10.0 on the investment property, Mr Market is now attaching a value of only $13.4m on LHT's established and profitable wooden pallets and wood waste recycling businesses, which generated a combined after-tax FCF (before capex) of approx. $4.1m in FY10, and net cash reserve of another a few millions $. Does this look like fair or right pricing? I suppose that's why ED Yap Mui Kee aggressively bought more LHT shares in the recent months (from Sep11 to Jan12).

[RBM]

LHT has just posted their FY 2011 results - looks to me like a superb return on first inspection. A 133% increase in bottom line NIAT to S$ 7.4 Mln and declaration of a proposed 0.5 cent dividend (vs last years 0.3 cents divi). Am still reading the results now ..... but it looks like things are going rather well across the board at LHT Holdings - I realise there is a S$ 3 Million pre-tax gain from their recent property re-evaluation ...... but even without this "one-off" impact the result is seriously good. Surely this counter is due for a major upward re-rating - and now we know why ED Yap Mei Lan was busy buying up stock in recent weeks. Also seems to support the content of dydx's posts on this thread - thanks (again) dydx.

I'm vested .......... and I'm pleased with what I'm reading,
RBM

[psolhawk]

The margin of safety for LHT has widened significantly. Brilliant. I am also particularly impressed by their adoption of RFID technology which enables them to track their pallet's location. Not just a conventional business that decides to stick to the usual way of doing things. Delivers value for customers.

[dydx]

The FY11 (ended 31Dec11) full-year results released last Friday.....
http://info.sgx.com/webcoranncatth.nsf/V...E004C3AF7/$file/LHT-Holdings-Ltd-31Dec11-Full-Year-Results-FINAL.pdf?openelement
showed LHT delivering an EPS of $0.0345 (of which $0.0144 attributable to a $3.068m gain from revaluation of investment property located at 44 Sungei Kadut St 1) and NAV/share hitting a new high of $0.1797, including a net cash reserve of $0.029/share. Rental and services income from 44 Sungei Kadut St 1 increased 22.6% yoy to reach a new high of $2.419m, and is poised to increase further after the recent capex. LHT has also raised the Final dividend to $0.005/share (vs. $0.003/share for FY10).

I think LHT appears quite well placed to grow overall business volume, revenue and profits further at a steady rate. What should be the fair price for the LHT share then? At least a small premium over its NAV/share, I think/hope. Would Mr Market be nice enough to continue re-rating this counter upwards towards its justified fair value?

[dydx]

After the release of the FY11 result, on 1Mar12 ED Yap Mui Kee resumed buying more LHT shares from the open-market and added 100 lots at $0.12/share - her highest price paid so far.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

With the lastest purchase, Ms Yap nows holds 24,021,130 LHT shares, or a 11.28% stake, in her personal name. Who says ladies are worse investors than men?!

[dydx]

Yesterday (26Mar12), ED Yap Mui Kee added another 4 lots at $0.12/share....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
I think this Ms Yap has a knack in buying LHT shares. While she is not in the market everyday, I think by her regular purchases Ms Yap has single-handedly guided LHT upwards since Sep11, when the share price was still below $0.09.

I noted there was a buyer today (27Mar12) queuing at a higher price of $0.123 to buy 200 lots throughout, but withdrew his order just before the market closed. Could it be Ms Yap again?

[RBM]

It was pleasing to see LHT's share price hit S$ 0.140 during the morning of today's SGX trading session. The share price settled back to S$ 0.130 in the closing minutes but it is good to see the counter again enjoying improved liquidity - there were some times last year when LHT shares could go a week without a single trade being done.

I'm very much with dydx in beleiving Executive Director Yap's regular purchases are helping to propel LHT's share price higher - it was pleasing to note that she was willing to pay S$ 0.125 per share in her most recent market purchase on 31st March 2012.

At the forthcoming 27th April AGM, amongst other things, I'll be interested to hear what Management states regarding the updated outlook for LHT's Woodchips Purchase Agreement with TP Utilities - a 15 year agreement which is due to see revenue generation commence as early as the coming quarter - it may possibly start only next year. In the context of LHT's modest - but improving and growing - financial dimensions, the TP Utilities agreement could be (repeat: could be) a key piece of business for the company. Annual revenues expected from the sale of Woodchips were quoted by LHT in their 15th August 2011 SGX disclosure to be in the range of S$ 900,000 to S$ 5,400,000.

Vested.

Yesterday (26Mar12), ED Yap Mui Kee added another 4 lots at $0.12/share....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
I think this Ms Yap has a knack in buying LHT shares. While she is not in the market everyday, I think by her regular purchases Ms Yap has single-handedly guided LHT upwards since Sep11, when the share price was still below $0.09.

I noted there was a buyer today (27Mar12) queuing at a higher price of $0.123 to buy 200 lots throughout, but withdrew his order just before the market closed. Could it be Ms Yap again?