Boustead Singapore

[money]

Really have to give it for the steady (g)old hands like Mr FF Wong & of course Warren B.
Warren B has again proved his super good timing with his humongous warchest.
After (arguably) largely missed out deploying warchest during covid plunges, now probably another chance for Boustead to significantly make good use of its (idled) cash? now that BP asset heavy ventures likely hard to proceed or expand.

haha i dont think this serves justice to warren

Warren bought apple and sold some 70% of it before the recent fall in apple's share price. Made many many billions

Boustead bought supposed undervalued bonds and got stuck with a como hotel. Put on sale with the hope that someone will buy. Given today's sentiments, i am unsure who would buy. Ends up incurring interest expense that may not even be covered by operating revenue. Struggle to make money

[weijian]

haha i dont think this serves justice to warren

Warren bought apple and sold some 70% of it before the recent fall in apple's share price. Made many many billions

Boustead bought supposed undervalued bonds and got stuck with a como hotel. Put on sale with the hope that someone will buy. Given today's sentiments, i am unsure who would buy. Ends up incurring interest expense that may not even be covered by operating revenue. Struggle to make money

Hi money,

I do agree with you it is far fetch to compare the two but my opinion on the COMO Orchard purchase differs with yours.

A quick background: Boustead/JV partner bought distressed mezzanine debt of the developer which are still subordinated to other creditors (bank debt, suppliers). When the developer of the land underwent voluntary liquidation, Boustead/JV partner bought over the asset and part of the purchase consideration was offset by the mezzanine debt. These are actually 2 transactions - the first is some sort of distressed debt investing, and the 2nd is a pre-auction sale.

Some notes:

(1) Unlike individuals paying interest on their mortgage payments, companies get tax deductions on their interest payments. If a company uses debt wisely, it is not as bad as an individual loading themselves up with a huge mortgage at high interest costs.

(2) Como Orchard is under JV accounting and so I am not sure how about the actual accounting since they are not represented on BSL's own financials. My guess is that Como Orchard is classified as PPE using "cost + depreciation". This means that the accounting is relatively conservative and when the eventual sale come, I wouldn't be surprised by large gains (recognized as share of profits from associate/JV) when it is been sold as "investment property".

(3) The business of hotel brands and operators is to help to maintain/elevate the prestige of the property. The operating returns of such investment properties have low ROICs to the owner of the property, but that is besides the point. Sometimes, buyers of investment properties may care more about wealth preservation than wealth creation.

(4) So how is the eventual sale going to come? I think a clue would be Como Orchard's neighbor Pullman Singapore Orchard. About 10years ago, it was sold by the previous hotel owner who also operated its own hotel brand, to a Mainland Chinese tycoon. In the last few years, the same tycoon was in the news in the aborted sale of Far East Shopping Center.

So end of the day, it is my belief that if you got a good asset at good prices and able to wait it out while adding value to it (eg. operating it), your future profit potential is enormous. Things are not linear in business or investing.

[ksir]

Really have to give it for the steady (g)old hands like Mr FF Wong & of course Warren B.
Warren B has again proved his super good timing with his humongous warchest.
After (arguably) largely missed out deploying warchest during covid plunges, now probably another chance for Boustead to significantly make good use of its (idled) cash? now that BP asset heavy ventures likely hard to proceed or expand.

haha i dont think this serves justice to warren

Warren bought apple and sold some 70% of it before the recent fall in apple's share price. Made many many billions

Boustead bought supposed undervalued bonds and got stuck with a como hotel. Put on sale with the hope that someone will buy. Given today's sentiments, i am unsure who would buy. Ends up incurring interest expense that may not even be covered by operating revenue. Struggle to make money

1) Don't think I ever imply or intend to compare the 2 based on their investment result.
2) It's more of their way of having warchest for opportunity such as now.
3) Selectively pick & compare their investment based on 1 investment case is just BS. 
eg: we can also pick Dexter shoes in warren case.