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16-02-2017, 10:49 PM
(16-02-2017, 09:13 PM)babyblue Wrote:(16-02-2017, 12:37 PM)Debronic Wrote: 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!
Agree that many investors do know that the land is stated at cost but like I mentioned, it's very difficult finding an actual estimate if you are a retail investor. We spent a lot of time digging through newspaper articles from 1980s and 1990s and 20+ years worth of annual reports to ascertain the value. Even getting hands on these old annual reports is not easy. That said, it is possible that analysts/fund professionals in the past may have this estimate kept somewhere in their database but the lack of coverage in recent years meant that maybe only a select group of people have access. So for all it's worth, it is still good to share this with the investing public who may not be accorded the same privilege.
I see your point on TCIL and do not disagree that Bukit Sembawang is one of those that may not have immediate/obvious catalysts. The catalysts are likely to be more situational such as bulk sale of their completed projects to avoid QC penalties. Its investment merits lie in the very cheap and plentiful landbank which it could monetize relatively quickly at high margins via project launches once the property market recovers. At the same time, unlike most other property stocks, its big net cash position shields it from potential interest rate shocks and gives it flexibility to continue rewarding shareholders via dividends or even ammunition to take advantage of any fire sale situations if the market goes down even further. That's why it is stated in the article as the pick "to ride out the property trough".
Anyway, just so you know, not all the stocks covered on the website are of the special situations/arbitrage type. When they are, it will probably be stated as one of the catalysts. Bukit Sembawang belongs to the category of deep value stocks. TCIL probably belongs to the same category too. Yes, I have done some research in the past on TCIL so I am aware of the potential it has. It's good that you bring it up for discussion nonetheless.
Lastly, thanks for your compliments on the website!
