Low Keng Huat (Singapore)

[shn]

Hi Jacmar,
I guess you are right. Chip Eng Seng has also gone up.

[greengiraffe]

http://info.sgx.com/webcoranncatth.nsf/V...1002E11EC/$file/20121211_LKHS_3Q-Results_FYE2012_Att.pdf?openelement

3Q results out:

Continued booking of Minton (fully sold) profits. Profits from PL Sq and Parkland Residence will only be booked on TOP in 2014. Meanwhile, LKH appears to have booked in expenses relating to the marketing of the 2 projects.

Parkland Residence now 86.7% sold vs low 70% reported earlier.

Net debt improved on receipt of progress payments from PL Sq and Parkland Residence.

Inputs from other buddies welcome.

[camelking]

enjoy the dividend and capital gain while monitoring closely the future development of the company

[greengiraffe]

Hi Camelking,

Thanks for your simple answer - it really fits a simple company with locked in cashflows from successfully launched projects.

Cash in this case is King since LKH has always been sharing wealth generously with its shareholders.

GG

enjoy the dividend and capital gain while monitoring closely the future development of the company

[camelking]

Hi Camelking,

Thanks for your simple answer - it really fits a simple company with locked in cashflows from successfully launched projects.

Cash in this case is King since LKH has always been sharing wealth generously with its shareholders.

GG

enjoy the dividend and capital gain while monitoring closely the future development of the company

You are welcome.
Probably the question now is whether the current price has factored in the present good news (Minton, PL Sq and to a certain extent, Parkland)
If so, should we sell or continue to collect the dividend?

[greengiraffe]

I think the way to look at a simple company like LKH where most risky development projects have been locked in would to be looked at the eventual cash hoard that they will end up.

With Minton fully sold, PL Sq sold 90% and Parkway almost 87%, with new developments, cash hoard will swell - LKH may just end up with 50 cents cash a share after repaying all project financing. They will also retain PL sq Retail that will generate around 2 cents recurring rental income a share. This is on top of the Hotel and F&B that is already generating around 2 cents a share in earnings, ie around 4 cents a share recurring.

In addition, we have yet to factor in development from its vast and undervalued landbank in Malaysia.

So it will be a judgemental call on LKH - is this price fair for a company that has so much hidden assets?

Hi Camelking,

Thanks for your simple answer - it really fits a simple company with locked in cashflows from successfully launched projects.

Cash in this case is King since LKH has always been sharing wealth generously with its shareholders.

GG

enjoy the dividend and capital gain while monitoring closely the future development of the company

You are welcome.
Probably the question now is whether the current price has factored in the present good news (Minton, PL Sq and to a certain extent, Parkland)
If so, should we sell or continue to collect the dividend?

[yeokiwi]

I am quite surprised by the relatively good sale of the Parkland despite that there are abundant new HDB flats, ECs and PCs around the same area. If all options that are currently signed with LKH are exercised, Parkland should not incurred any loss.

The office sale at PLS should roughly cover land cost and construction cost. Therefore, LKH's profit is the retail space at PLS.
The area is 95000 psf and the monthly rental is around $16 - $18 psf.
Assuming $16psf, the annual rental is around $18 million.LKH's share is around $14.4 million which is around 2cts per share.

[camelking]

I think the way to look at a simple company like LKH where most risky development projects have been locked in would to be looked at the eventual cash hoard that they will end up.

With Minton fully sold, PL Sq sold 90% and Parkway almost 87%, with new developments, cash hoard will swell - LKH may just end up with 50 cents cash a share after repaying all project financing. They will also retain PL sq Retail that will generate around 2 cents recurring rental income a share. This is on top of the Hotel and F&B that is already generating around 2 cents a share in earnings, ie around 4 cents a share recurring.

In addition, we have yet to factor in development from its vast and undervalued landbank in Malaysia.

So it will be a judgemental call on LKH - is this price fair for a company that has so much hidden assets?

Hi Camelking,

Thanks for your simple answer - it really fits a simple company with locked in cashflows from successfully launched projects.

Cash in this case is King since LKH has always been sharing wealth generously with its shareholders.

GG

enjoy the dividend and capital gain while monitoring closely the future development of the company

You are welcome.
Probably the question now is whether the current price has factored in the present good news (Minton, PL Sq and to a certain extent, Parkland)
If so, should we sell or continue to collect the dividend?

There was a report done by CIMB GK when the major shareholder did a general offer at 45cents or so few years ago. The report concluded that the company is worth 70cents or so...that was before the current projects.
I agree with you that the company is worth more than the present price but the price may never reach its "fair value"

Vested

---

I am quite surprised by the relatively good sale of the Parkland despite that there are abundant new HDB flats, ECs and PCs around the same area. If all options that are currently signed with LKH are exercised, Parkland should not incurred any loss.

The office sale at PLS should roughly cover land cost and construction cost. Therefore, LKH's profit is the retail space at PLS.
The area is 95000 psf and the monthly rental is around $16 - $18 psf.
Assuming $16psf, the annual rental is around $18 million.LKH's share is around $14.4 million which is around 2cts per share.

frankly, me too.
The timing of the launch was bad. There was a decision to stop future DBSS project by HDB and the $888,000 pricing by Sim Lian at Tampines.
However, i don't think the margin will be good as i got the impression that the bidding price was kind of high.
Parkland was and still is the only project launched solely by LKH .
Perhaps they should stick to JV.

[greengiraffe]

LKH hit a new all-time record to close at 60 today. Relative to the RNAV of between $1 to $1.20, the discount remains generous. Dividend yield assuming LKH sustains 4 cents DPS for the next 3 years is also attractive at 6.67%. Given that LKH has completely sold out Minton, sold more than 90% of PL Square Offices and close to 90% of Parkland Residence, LKH should return to a substantial net cash level by 2015/16 assuming there is no new major development projects.

With the recent buzz of Malaysian properties in particular corporate action with regards to those in Johor (mainly Iskandar), it may be interesting to revisit LKH's Malaysian property landbank.

LKH has historically been roping in by the delisted Malaysian parent General Corporation to JV in several Malaysian projects. While LKH has provided details on these projects, I will only list those that have yet to be launched:

i) 20% stake in proposed condo development in Jalan Conlay (site area 172143sf plot ratio 6) last valued 8 Sept 10 at RM278m (100%)

ii) 49% stake in 207 bungalow lots,Bandar Sri Alam, Johor (site area 3298458sf) last valued 6 Sept 10 at RM 52.8m (100%) or RM15.85psf

iii) 49% stake in a mixed development (named Tiram Park) in Jalan Kota Tinggi, Johor (site area 6622184sf) last valued 6 Sept 10 at RM21.6m (100%). This project has approval for 871 residential units, 615 low cost housing, 49 shophouses and 2 petrol stations. Appears to me as a township development.

iv) 49% stake in residential land bank Lot 112440, Johor. Based on Gen Corp IFA documents for LKH back in 2010, I cannot find any valuation for this development.

LKH's annual report 2011/12 was themed "A Portfolio Of Opportunities". While land scarce Singapore has been the main driver of earnings for LKH, its substantial landbank in Johor and KL is significant. However, given Malaysia's land mass, it really make me wonder what potential will it hold for LKH. Given that LKH is dependent on General Corp to drive these projects, LKH can only be seen as a dependent beneficary.

Will appreciate any buddies with insights to valuation of Malaysian property developments.

GG

[safetyfirst]

omg i bought LKH because of the Minton and Paya Lebar squares... i didnt even notice its malaysia land bank, it looks like i have much more to learn. Thanks giraffe for highlighting