First Sponsor

[Contrarian]

> In terms of governance risk, on the surface FSG is probably quite safe since there are important Singapore figures with their reputations
> at stake if it blows up, namely Kwek Leng Beng and Chew Gek Khim

They probably got the cost at a fraction of the IPO.

The reason it is listed here is probably because HKSE is too big for them, and the 2 tycoons want them here :-)

[thinknotleft]

I think tt hkse property stocks are at low P/B, because pty stcks are usually priced below book, hk property mkt downturn, china pty dowturn (lots of hk developer involve in china) etc China pty stocks in hkse also face the risk of no bank wanting to lend $ to them, cashflow issues when they cannot sell the project. On dividend, i observe tt hk pty stocks start to give more in last 2-3 yrs.

[greengiraffe]

http://www.businesstimes.com.sg/companie...-falls-214

First Sponsor Q3 profit falls 21.4%
By
Kenneth Limkenlim@sph.com.sg@KennethLimBT
25 Oct5:50 AM
Singapore

FIRST Sponsor Group posted a 21.4 per cent drop in net profit during its fiscal third quarter as it could not match a sizeable site sale from a year ago. The China-focused property developer and financing services provider said net profit fell to S$14.9 million, or 2.56

[greengiraffe]

http://infopub.sgx.com/Apps?A=COW_CorpAn...FINAL_.pdf

Thanks to a buddy's lead, I have revisited this "submarine".

The main driver appears to be the collateralised property financing business. The property financing business has growth substantially since beginning 2014. From a loan book of RMB 150m (31/12/13) to RMB 801m (31/12/14) and further expanded to RMB1101m as of 31/3/15). LV ratio appears conservative with highly attractive interest rate of 17.5 - 20%.

Of course, there are the mainland developments.

Since beginning of the year, First Sponsor has added 2 properties in Holland taking advantage of low financing costs and long lease. Both addition adds to bottomline immediately:

i) http://infopub.sgx.com/Apps?A=COW_CorpAn...0Final.pdf

ii) http://infopub.sgx.com/Apps?A=COW_CorpAn...Final_.pdf

Leveraging on the experiences of Tai Tak Group (Banker background - Ho Sim Guan linked family owns a strategic stake in UOB) and HL Group (Global real estate and hospitality), there is more than meets the eye for this listing.

Unfortunately, public free float is a miserable 14.7% and guided dividend policy is equally miserable (at S$10m or $0.017/share).

Base on IPO prospectus, RNAV of First Sponsor is around $2.00.

Newly Vested
GG

[butcher]

At $1.26, there is only 16% discount to NAV approx. $1.5165

This is a minnow competing against other giants in the China market. Assuring factor is Kwek owns big chunk in the company.

CDL itself also went into China market and have its own China's arm, CDL China spearheaded by Sherman Kwek, son of Mr Kwek LB

http://infopub.sgx.com/FileOpen/FirstSpo...eID=342741

[Nick]

At $1.26, there is only 16% discount to NAV approx. $1.5165

This is a minnow competing against other giants in the China market. Assuring factor is Kwek owns big chunk in the company.

CDL itself also went into China market and have its own China's arm, CDL China spearheaded by Sherman Kwek, son of Mr Kwek LB

http://infopub.sgx.com/FileOpen/FirstSpo...eID=342741

Shouldn't be confused as a property developer. It's primarily a property financier and property investor. Essentially a rapidly growing 'pawn-broker' in China with European commercial property ownership ambition.

(Not Vested)

[butcher]

I thought First Sponsor primary activities are that of a property developer, property financier and lastly holding of investment properties?
Was looking at page 3 of the annual report which shows the breakdown of the sources of revenue, profits and net assets by segments. Where property development is the major segment in terms of the 3 mentioned metrics.

Financial review from page 36 to 40 corroborated with the understanding. A list of properties under development for sale are also listed on page 40.

Also as disclosed in Note 1 of the audited financial statements on page 56, extracted as follows:-

The principal activities of the Company are those relating to investment holding. The principal activities of the
subsidiaries are those relating to investment holding, property development and sales, property investment,
hotel ownership and operations and provision of property financing services.


There are 3 business segments with property development clearly being the major segment.

[butcher]

Additionally, just for quick laymen sharing of information only.

Saw on page 40, First Sponsor have a development project called Star of East River Project @ Dongguan on page 40.

Was in Dongguan around this period last year, think the economic landscape of the local Dongguan have changed.
2 primary drivers of Dongguan economic activities are manufacturing and entertainment activities.
A businessman mentioned a lot of companies have ceased manufacturing activities in Dongguan and shifted to other areas which he approximates 50% had left, although there may have new entrants but details unknown.
Secondly, Dongguan used to be an entertainment hub well-known to lots of people but since 2014 CNY, things changed. No longer used to be that bustling. Lots of big hotels are now vacanted and occupancy rate at some less than 50% or even lower on my laymen eye view opinion. If there is a chance to go on a working trip again this year, perhaps will take some pictures and share with you guys here.

[greengiraffe]

Property financing appears to be the most lucrative and fastest growing part of their business.

Obviously, their development and investment experience will aid them with their collaterised financing business as they will pick and choose those properties that they are keen to lend to.

Anyway, it doesn't really matter to this "submarine" as both the substantial holders are deep pocket guys and this vehicle is probably small change to them.

What is more interesting is their focus and areas which they are aggressively pursuing which appears to be complimentary to at least CDL's present business model and geographical coverage.

I thought First Sponsor primary activities are that of a property developer, property financier and lastly holding of investment properties?
Was looking at page 3 of the annual report which shows the breakdown of the sources of revenue, profits and net assets by segments. Where property development is the major segment in terms of the 3 mentioned metrics.

Financial review from page 36 to 40 corroborated with the understanding. A list of properties under development for sale are also listed on page 40.

Also as disclosed in Note 1 of the audited financial statements on page 56, extracted as follows:-

The principal activities of the Company are those relating to investment holding. The principal activities of the
subsidiaries are those relating to investment holding, property development and sales, property investment,
hotel ownership and operations and provision of property financing services.


There are 3 business segments with property development clearly being the major segment.

[greengiraffe]

Credit rating should be a forgone with the solid financial backing of shareholders...

What is more interesting is what the company intends to do with "cheap" financing...

Vested
GG

http://infopub.sgx.com/FileOpen/FSGL%20-...eID=350437

ESTABLISHMENT OF S$1,000,000,000 MULTICURRENCY DEBT ISSUANCE PROGRAMME
The Board of Directors of First Sponsor Group Limited (the "Issuer") wishes to announce that it has today established a S$1,000,000,000 Multicurrency Debt Issuance Programme (the "Programme"). In connection therewith, the Issuer has appointed DBS Bank Ltd. and Oversea-Chinese Banking Corporation Limited to act as arrangers and dealers of the Programme.
Under the Programme, the Issuer may, subject to compliance with all relevant laws, regulations and directives, from time to time issue notes (the "Notes") and perpetual securities (the "Perpetual Securities", and together with the Notes, the "Securities") in series or tranches denominated in Singapore dollars or any other currency agreed between the Issuer and the relevant dealer(s) on the same or different issue dates.
Each series or tranche of Notes may be issued in various amounts and tenors, and may bear interest at fixed, floating, variable or hybrid rates or may not bear interest, as may be agreed between such relevant dealer(s) and the Issuer. The Notes and the coupons of all series will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer.
Perpetual Securities have no fixed maturities, may be issued by the Issuer in various amounts, may bear fixed or floating rates of distribution, and if so provided in the applicable pricing supplement, may have distributions deferred at the option of the Issuer. Senior Perpetual Securities and the coupons relating to them will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer. Subordinated Perpetual Securities and the coupons relating to them will constitute direct, unconditional, subordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with any Parity Obligations (as defined in the terms and conditions of the Perpetual Securities) of the Issuer.
The Securities will be offered in Singapore pursuant to exemptions invoked under Sections 274, 275 and/or any other applicable provision of the Securities and Futures Act, Chapter 289 of Singapore.
Further terms and conditions of the Securities are also set out in the information memorandum dated 15 May 2015 relating to the Programme (the “Information Memorandum”), as may be modified by the applicable pricing supplement upon issue of the Securities.