Wheelock Properties

[ValueMushroom]

Hi TUBInvesting, dont be discouraged, please continue to share.

In my own analysis, I also applied a discount to the different asset classes when computing the liquidation value of a company. Eg cash or cash equivalent, I treat it as full value, investment properties I will use the market value if available and then discount it by 50%. For non property PPE, I discount it by 100%. I try to be very conservative.

[TUBInvesting]

Hi TUBInvesting, dont be discouraged, please continue to share.

In my own analysis, I also applied a discount to the different asset classes when computing the liquidation value of a company. Eg cash or cash equivalent, I treat it as full value, investment properties I will use the market value if available and then discount it by 50%. For non property PPE, I discount it by 100%. I try to be very conservative.

Thanks for your kind words. 

Just felt some words could be phase better. Anyway I always believe its better to be on the conservative side.

[jeremyow]

Hi TUBInvesting, I have followed this thread and the discussions. Just to encourage you to continue in your sharing. We need to do our investment analysis as scientifically as possible and according to sound accounting understanding. This will at least give us a fair investment assessment and thesis. However having said that, investment assessment is not only scientific in nature but also can be an art. The value of a business may not only lie solely on its accounts and financial statements. Accounts and financial statements do give us a sound fundamental basis of judgment and analysis but the actual value of a business maybe more fluid than just dependence on a set of numbers alone. So, in assessing the value of the assets of Wheelock Properties, one can base his analysis on the set of numbers in the financial statements.

However, we will only know the value of the company when an acquirer offers to acquire the company at a certain offer price which maybe more than or less than the calculated value derived from the financial statements. So, in deriving any analysis from calculations, this is just a guideline and may not be the eventual truth. Companies and their businesses keep interacting with their operating environment (which constantly changes) and the value of businesses keep changing over time. There are also macro-environmental factors which keeps changing which may affect a business to certain extent.

Who can see into the future value of the assets of Wheelock Properties to say for sure whether a no discount, a 10% discount, a 20% discount, or any other percent discount is the correct and prudent estimate? Maybe the assets may even be bought over at much above valuations due to any special favourable circumstances that arise in future benefitting Wheelock Properties? No one is correct now as we cannot predict the outcome of the future. Our investment analysis and thesis is just our guideline in the present circumstances and it maybe proven correct and also wrong in due time.

[Boon]

Hi all,

Sorry for the lack of information from the debate.

To answer a few questions listed above:

1. In my scorecard method, I always will do a discount of 30%, 50% and 70% to my non current assets, regardless of the company and industry. Thus, I did the same for Wheelock properties as well, even through I understand that it may be understated.

2. Why I change from 50% to 30%, was an error on my part when I input the figures. When I was comparing initially across all developers, I gave all their non-current asset a 30% discount.  However, for Wheelock properties, I inputted a 50% discount. Thus, it was wrong. Subsequently, I notice it and amended it. Thus, you may notice 2 different NAV for Wheelock in the post.

It maybe wrong in many people's eyes with what I am doing. But I guess I am just being more prudent in this way.

Hope these answer all the questions.

<Vested>

Erm then your valuation is flawed. If you give all developers 30% disc to non current asset but gives no reason to justify it, you might as well dont do it, as deducting the same percentage for all is equals to not deducting at all.

Noted. I guess everyone has their own way of viewing things. that's the interesting thing about this forum. Only time will tell.

How do you maintain the objectivity of your asset valuation if all things could be viewed so subjectively ?

My objectivity lies in my scorecard method. It reduces biaseness within myself and only those that read and understand my method will understand. 

For the comparison of wheelock against other developers, I gave everyone the same discount so that all non current asset will be discount in a same way.

The reason why I gave discount is that in event of liquidation nothing can be sold at market value. That why I gave discount.

Although it seems subjective, but I do have a theory of how much discount I give to an individual company when inputting in my scorecard.

Seriously just sharing my analysis but getting blasted for 1 figure that I deem doesn't make sense when people say I might as well don't bother research. In a place like a forum, I assume some respect should be given considering all of us to be successful in a certain way or another.

Let's move on from this topic. And if you really interested to know more, do PM me. Thanks.

TUBInvesting,
 
Wow, if my interpretation is correct, no one is suggesting that “you may as well don’t bother to do research” - it appears to me that you are “offended” by your own wrong interpretation on the statement by Scg8866t, which reads:
 
“Erm then your valuation is flawed. If you give all developers 30% disc to non current asset but gives no reason to justify it, you might as well dont do it, as deducting the same percentage for all is equals to not deducting at all.”
 
“You might as well don’t do any discount at all” is my interpretation, not “you might as well don’t bother to do research or analysis at all”.
 
That said, without applying any discount to the non current assets at all, how would the scorecard results and your investment decision be affected?
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[weijian]

Lets hope the moderator can do a sufficiently objective view of the situation

- i note that forummer TUB has some mistakes and also own unique conception on his valuation. He has graciously admitted his mathematical mistake.
- forummer sg8866t and Boon have had a few follow up posts that focus on facts but also a few subjective views that goes BEYOND the scope of wheelock nav discussion
- since this is wheelock thread, lets focus n not run off topic.
- Finally we can all do better in VB by (1) less personal posts nt related to company of interest, (2) learning to have a better temperament dealing with non friendly posts.

[TUBInvesting]

Lets hope the moderator can do a sufficiently objective view of the situation

- i note that forummer TUB has some mistakes and also own unique conception on his valuation. He has graciously admitted his mathematical mistake.
- forummer sg8866t and Boon have had a few follow up posts that focus on facts but also a few subjective views that goes BEYOND the scope of wheelock nav discussion
- since this is wheelock thread, lets focus n not run off topic.
- Finally we can all do better in VB by (1) less personal posts nt related to company of interest, (2) learning to have a better temperament dealing with non friendly posts.

Firstly thanks for the encouragement by jeremyow and valuemushroom.

Sorry for the commotion created as well, especially if I reacted wrongly. 

And to the questions about my scorecard, just PM me if you are interested.

Anyway as per what the moderator states, this is abt  wheelock. Lets get back to it. Thanks.

[Boon]

1) Well, no one is perfect – we all do make mistakes at times.
2) TUB has a unique conception using scorecard system on his valuation on Wheelock Properties which he is kind enough to share with us on this public forum.
3) Tub has admitted to having made an “input mistake” to his “scorecard” system.
4) In asset valuation – there are subjective measurements (such as how much is the brand of a company is worth) and objective measurements (such as the tangible book value or nav of Wheelock Properties.)
5) Scg8866t is “questioning” TUB on the logic of “arbitrarily” applying a constant discount across all properties counters that he is comparing with Wheelock.  
6) When an objective measure such as the NAV is “multiplied” or “muddled” with a subjective “discount factor”, the “product” would become a subjective measure as well. If this subjective measure is then used as an “input” to TUB’s scorecard system, the output of the score would be a subjective measure as well. Hence, the logic behind my question on how TUB maintain his “objectivity” in his valuation.
7) So far, I don’t think Scg8866t and/or I have ventured BEYOND the scope of Wheelock discussion – it‘s all still relevant, I reckon. Neither have we delved into any personal issue of anyone at all.
8) Let’s carry on the discussion including TUB’s scorecard system on this forum.
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[Scg8866t]

Yes nothing ad hominem, just a clarification on how to justify certain aspect of a valuation that might be subjective to some.

Anyway back to wheelock. From their sales of ardmore three and panaroma, we should see massive cash inflow into its coffers next year(maybe reaching a bil). Which could potentially lead to a special div or a big subtantial landbank purchase(australia perhaps?). I find their assets and associate assets to be very synergised. They can also easily maximize gfa by forming a link between wheelock place and hilton/four seasons to conquer the western orchard belt. To each his/her own.

[Boon]

Yes nothing ad hominem, just a clarification on how to justify certain aspect of a valuation that might be subjective to some.

Anyway back to wheelock. From their sales of ardmore three and panaroma, we should see massive cash inflow into its coffers next year(maybe reaching a bil). Which could potentially lead to a special div or a big subtantial landbank purchase(australia perhaps?). I find their assets and associate assets to be very synergised. They can also easily maximize gfa by forming a link between wheelock place and hilton/four seasons to conquer the western orchard belt. To each his/her own.

Cash level did hit the billion SGD mark back in 2011 during the more profitable period but DPS has been flat through out....


Wheelock Properties:

Revenue (SGD mil):
FY2009 = 387
FY2010 = 572
FY2011 = 390
FY2012 = 209
FY2013 = 117
FY2014 =  99
FY2015 = 372
9M2016= 545
 
NPAT (SGD mil):
FY2009 = 263
FY2010 = 325
FY2011 = 291
FY2012 =   63
FY2013 =   40
FY2014 =   43
FY2015 =   40
9M2016=   75
 
EPS (SGD, cents ):
FY2009 = 21.99
FY2010 = 27.21
FY2011 = 24.33
FY2012 =   5.29
FY2013 =   3.35
FY2014 =   3.60
FY2015 =   3.37
9M2016=   6.25
 
DPS (SGD, cents):
FY2009 = 6.0
FY2010 = 6.0
FY2011 = 6.0
FY2012 = 6.0
FY2013 = 6.0
FY2014 = 6.0
FY2015 = 6.0
FY2016 = ?
 
NAV per share (SGD):
FY2009 = 2.10
FY2010 = 2.36
FY2011 = 2.42
FY2012 = 2.61
FY2013 = 2.51
FY2014 = 2.62
FY2015 = 2.54
9M2016 =2.52
 
Debt (SGD mil) / Cash (SGD mil):
FY2009 = 233/759
FY2010 = 103 / 860
FY2011 = 160 / 1,081
FY2012 = 278 / 720
FY2013 = 631/ 457
FY2014 = 658/ 408
FY2015 = 515/ 612
9M2016 = 16 / 399
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[Boon]

2009 ~ 2011 seemed to be a more profitable period (with EPS of more than 20.0 cents) for Wheelock than the last 4 years (with EPS of less than 6.0 cents)
 
From 2012 to 2015 (inclusive), Wheelock has been distributing out more than what it has earned over the last 4 years.
 
Number of shares issued = 1,196,559,876

SGD 71.8 m is needed yearly to support a DPS of 6.0 cents

It seems that recurring income from “Investment properties” alone is insufficient to cover a DPS of 6.0 cents – unless more cash is being deployed to acquire more investment properties to boost recurring income, it looks like earning contribution from the property development segment would still need to be relied upon to support a DPS of 6.0 cents.  
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