Bukit Sembawang

[TUBInvesting]

Latest Results by Bukit Sembawang Estates Ltd.

http://infopub.sgx.com/FileOpen/BSEL_4Q2...eID=406622

This quarter seems bad. All property counters definitely affected by the cooling measures. But then declared similar dividend as per previous year.

Maybe due to the fact that they have no financial costs. Possibility of privatizing?

<Vested>

http://tubinvesting.blogspot.sg/

[TUBInvesting]

Did an analysis on Bukit Sembawang in view of their recent full year results and bumper dividend ahead.

My pros

1. Debt-Free
2. Price continues to be below its Net Current Asset Value
3. Continue to be a “Singapore Only” Developer
4. Land Bank and Special Shareholders
5. Lack of Activities
6. Ability to generate Free Cash Flow

My cons

1. Future projects
2. Sustainability of the Dividend

http://tubinvesting.blogspot.sg/2016/06/...t-has.html

<Vested>

[Debronic]

Sharing research on Bukit Sembawang:

Bukit Sembawang Estates Ltd- Undervalued proxy to buying land at 1953 prices

While a recent surge of interest has seen Bukit Sembawang' s share price rally 9% in 3 weeks, we think investors still do not fully appreciate how undervalued it truly is. With its legacy land bank carried at a historical cost determined more than 60 years ago, a best in class dividend yield of more than 6.7% and a net cash balance sheet that is the strongest it has been in at least 20 years, BSE is our top pick to ride out the current trough in the property cycle.

Just revaluing the legacy landbank at close to current market prices and without taking into account any future development profits should see the Company add another $2.29 per share to its NTA, giving it a base NTA of at least $7.21 per share, or 46% above its last closing price of $4.94. This is not even taking into account any potential gains from BSE&rsquo s recent moves to resolve its long running dispute over its land along Ang Mo Kio Ave 5 (Lot 12949A Mk 18) by surrendering its 999 year lease for a fresh 99-year one in order to convert it fully into residential land without restrictions or the bulk sale of its non-landed projects built on land acquired at attractively low prices.

Full report here:

http://www.stockresearchasia.com/1/post/...rices.html

[babyblue]

Please note bulk of the dividend is special dividend(about 70% irrc). Company will not be making bumper crop of profit this year. Is it not a tad risky to expect same amount of dividend.

Everybody knows about the value of its land. But what gives? Its stock price is still languishing at the level for donkey years. In today's market, even for fundamental plays earnings are hugely important.

Countless stock trading below asset value. A close cousin, Tan Chong International has a "land bank" at 1983 prices as well. But so what?

[BlueKelah]

Yup usually this type property co. are value trap which only boom if going for privatisation or when prop market boom.

Most investors still going for earnings or yield.

Recent trump rally for STI has lifted most stocks, many prop counter also up.

Sent from my MotoG3 using Tapatalk

[opmi]

Yup usually this type property co. are value trap which only boom if going for privatisation or when prop market boom.

Most investors still going for earnings or yield.

Recent trump rally for STI has lifted most stocks, many prop counter also up.

Sent from my MotoG3 using Tapatalk

Or when someone dies, then value gets unlocked...

[Debronic]

Yes, 29 out of the 33 cts are "special dividends" to be precise. But they have been paying "special dividends" of various quantums for 6 years running. To me, it is not important what they call it as long as it is not one-off. I do agree that the cashflows alone may not sustain the same level of dividends going forward given earnings are lumpy for all property companies focused purely on developments. That said, the current net cash pile together with cashflow from their mainstay of landed can potentially prop it up for at least a few more years, which is why it is stated that they can afford the dividends if they wish to.

Actually, I don't know that everyone knows about the actual value of the land because I haven't seen anyone ever mentioned how much it is valued on their books having looked high and low for years. I have seen a couple of analysts estimating them at ~133 psf and 80 psf several years ago even though they did not state what their bases were. Maybe you can share where you have seen it?

And I really wouldn't use Tan Chong Int as an example of a landbank. A landbank is one in which you have no use for at the moment and which you can convert into future earnings via property developments. Tan Chong Int does have a substantial list of properties although almost all of them are used as showrooms. Many of the sites are also on short leases of between 10-60 years. Also, not all their properties are carried at 1984 prices. Those that are deemed investment properties are carried at current prices and subject to revaluation every year. Anyway, for the sake of discussion, even if they were to stop their core business entirely and focus on property development, their freehold sites (including the ones in Bukit Timah, Aljunied and Woodlands) will only amount to less than 700,000 sq ft. Not to mention the fact that TCI will have to pay hefty development charges to convert them into residential use. This is just the Singapore ones of course. Can't really comment on their overseas properties because I have little knowledge in those.

[Debronic]

Please note bulk of the dividend is special dividend(about 70% irrc). Company will not be making bumper crop of profit this year. Is it not a tad risky to expect same amount of dividend.

Everybody knows about the value of its land. But what gives? Its stock price is still languishing at the level for donkey years. In today's market, even for fundamental plays earnings are hugely important.

Countless stock trading below asset value. A close cousin, Tan Chong International has a "land bank" at 1983 prices as well. But so what?

Yup usually this type property co. are value trap which only boom if going for privatisation or when prop market boom.

Most investors still going for earnings or yield.

Recent trump rally for STI has lifted most stocks, many prop counter also up.

Sent from my MotoG3 using Tapatalk

There is probably a fine but distinct line between a value trap and a value stock that just hasn't been recognised by the market.  
As value investors, isn't it our wish to find the latter, figure out their actual value (whether measured based on yield, earnings or balance sheet) before the market does? 

[babyblue]

Yes, 29 out of the 33 cts are "special dividends" to be precise. But they have been paying "special dividends" of various quantums for 6 years running. To me, it is not important what they call it as long as it is not one-off. I do agree that the cashflows alone may not sustain the same level of dividends going forward given earnings are lumpy for all property companies focused purely on developments. That said, the current net cash pile together with cashflow from their mainstay of landed can potentially prop it up for at least a few more years, which is why it is stated that they can afford the dividends if they wish to.  

Actually, I don't know that everyone knows about the actual value of the land because I haven't seen anyone ever mentioned how much it is valued on their books having looked high and low for years. I have seen a couple of analysts estimating them at ~133 psf and 80 psf several years ago even though they did not state what their bases were. Maybe you can share where you have seen it?

And I really wouldn't use Tan Chong Int as an example of a landbank. A landbank is one in which you have no use for at the moment and which you can convert into future earnings via property developments. Tan Chong Int does have a substantial list of properties although almost all of them are used as showrooms. Many of the sites are also on short leases of between 10-60 years. Also, not all their properties are carried at 1984 prices. Those that are deemed investment properties are carried at current prices and subject to revaluation every year. Anyway, for the sake of discussion, even if they were to stop their core business entirely and focus on property development, their freehold sites (including the ones in Bukit Timah, Aljunied and Woodlands)  will only amount to less than 700,000 sq ft. Not to mention the fact that TCI will have to pay hefty development charges to convert them into residential use. This is just the Singapore ones of course. Can't really comment on their overseas properties because I have little knowledge in those.

yea thats the thing. do note while special dividend has been paid for 6 years. only in last 2 was it greatly increase to 33cents. to me 2 data points doesnt really make a trend. their cashflow simply do not warrant such a high amount in the long run. they could well continue to give such high dividends and you could be right. but there are also many examples where companies simply did not keep up with bumper dividends. Only the management themselves will know. Have they made any indication? And if so is there reason to take their word for it?

the value of land is well known based on my empircal observations. Interaction with professionals in the industry(analyst, fund managers, remisers, bankers) and even not a few retail players. but based on deduction, i think its a pretty sound conclusion to make. After all, bukit sembawang has been listed for so many years, its a well known mid cap, shareholders consist of well known family, a number of institutional investors, and at least one or two other richest Singaporean family, with a healthy free float in the market. its not a hidden gem. its a gem right out in the open. and every once in a while someone will write about its land bank in financial publications though as you mentioned valuation may differ.

i agree with your points on TCIL. but despite those, and accounting for those, the value of those land is just enormous vis-a-vis TCIL's market cap. Not forgetting TCIL has an extremely valuable distribution business and other up stream and down stream divisions ( dig abit and you can see just how valuable a business TCIL). But i digress. Anyway my simple point is value needs a catalyst especially in a market like singapore, and especially if you care about chasing alpha.

Anyway im a fan of your stock picks and astute fundamental analysis. In fact i had a few of the stocks you wrote up on before like TSH and IPC. And i think you wrote about Chuan hup too? But the difference between those ideas and this current one is really the lack of catalyst in this particular stock. Will be happy to share ideas and maybe even stock picks with you. Feel free to pm me!

[opmi]

Coincidentally, I was reading this....

Mohnish Pabrai – Value Is Its Own Catalyst – The Market Is a Weighing Machine - ValueWalk
http://www.valuewalk.com/2017/01/mohnish...g-machine/

Cheapness is an Excellent Catalyst | Base Hit Investing
http://basehitinvesting.com/cheapness-is...-catalyst/

And sometimes you have to pay up after catalyst happened.