Low Keng Huat (Singapore)

[greengiraffe]

http://info.sgx.com/webcoranncatth.nsf/V...7002F8D23/$file/20130408_LKHS_DisclosureOfInt_FORM1_V4_9_1_LKB.pdf?openelement

Low Keng Boon filed open mkt purchase notices on behalf of his wife Mdm Lau Choy Lay:

4 April 13 +107k @ $0.71
5 April 13 +258k @ $0.719919

http://info.sgx.com/webcoranncatth.nsf/V...7000E37D0/$file/20130408_LKHS_Misc_SubscriptionOfShares_Kismis_Att.pdf?openelement

Enbloc Kismis Lodge:

(a) Property All the strata lots and common property comprised in strata title no.
133 in the development known as Kismis Lodge situated on the whole
of Land Lot 1305L of Mukim 5 (“Property”)
(b) Tenure of
Land
Estate in Perpetuity
© Total Land
Area
Approximately 70,283 square feet
(d) Purpose Redevelopment of the Property into 3 storey mixed landed residential
units
(e) Purchase
price
S$84.18 million

Very helpful info as plot ratio is missing for evaluations.

wow what an endorsement by the MD at such elevated price already. I am holding to my share tightly.
the land acquisition looks like a good bet as nowadays mix development seems to be the rage.

make no mistake - its the woman that is behind the successful man.

At $0.72, the yield is 6.25% and the discount to RNAV ranges between 28% to 40% depending on the estimated RNAV range of $1.00 to $1.20.

The enbloc for mix development shows they good feel on what is marketable even if the going gets tough.

[mosi]

Hi,

This is a surprising development. I have always thought that LKH is not as aggressive as other developers, but I view this as a very aggressive move.

One note - this is a mixed landed RESIDENTIAL development, not a mixed-used development. Correctly me if I am wrong, LKH can only build residential units and their SGX release stated so as well.

There's a reason why the owners of Kismis Lodge have faced difficulties in en-blocing their units. And it is due to the restrictive URA guidelines. According to current zoning guidelines, the new development is limited to "3-storey mixed landed". Whereas it is currently a four storey walk-up apartment.

Furthurmore, there are many questions unanswered by LKH's annoucement:
1. Who won the bid? Who is Newfort Alliance (Kismis) Pte. Ltd?
2. The usual announcement would include the PSF PPR but this info is missing. I'm guessing it's 1.4x but then again, I'm having difficulties tying up different announcements and releases. It could be 1x but I don't think 1x makes sense.

Anyway, however you look at it, it's on the high side. With land costs at 1198 psf, add on construction costs of 300psf, you are looking at $1500psf. LKH could try to sell at $2000psf but that's hardly cheap.

[Image: 55PHbZv.jpg]
__________________________________________________
My Margin Of Safety Investing thoughts http://www.mosi.sg

[Jacmar]

Well you will have the chance to ask all the questions in the coming AGM.
Couple of things to note:
1. freehold land is hard to come by. They can even sit on it without developing it and treat it as a land bank and let the land appreciate over time
2. the URA master plan has not come out yet but will be soon. Is there going to be a surprise on the upside for this property? Maybe they think so.... lets wait and see.
3. this project is small in comparison to their other projects. so don't get too excited. they are a very conservative bunch of management.
they even go in with just 70% partnership and not the whole lot.
4.Newfort Alliance (Kismis) Pte. Ltd is just a company set up to do this project and they have 70% share.
5. it looks like they won the bid on a private basis as there is no mention of a tender exercise which is good as tendering tends to inflate the price even more.

if in doubt still , just follow the insider to buy/stay invested.

[ngcheeki]

4.Newfort Alliance (Kismis) Pte. Ltd is just a company set up to do this project and they have 70% share.

Based on the announcement, Newfort Alliance is the minority owner of 30% instead of 70%.
"
The Board of Directors of Low Keng Huat (Singapore) Limited (“LKHS” or the
“Company”) wishes to announce that East Peak Development Pte. Ltd. (“Eastpeak”), a
wholly-owned subsidiary of LKHS, has subscribed for 700,000 ordinary shares in the
share capital of Newfort Alliance (Kismis) Pte. Ltd (“Kismis”) at a total subscription
amount of S$700,000.00 (“the Subscription”) on Friday, 5 April 2013.
...
Eastpeak has 70% equity interest while Newfort has 30% equity interest in Kismis (“Shareholding Proportion”).

"
http://info.sgx.com/webcoranncatth.nsf/V...7000E37D0/$file/20130408_LKHS_Misc_SubscriptionOfShares_Kismis_Att.pdf?openelement

The following is the news on successful en-bloc of Kismis Lodge.

"KISMIS Lodge, a freehold residential development set among the landed housing estates of Upper Bukit Timah, has been sold en bloc for $84.18 million.

The owners will get about $1.315 million each in the collective sale to Newfort Alliance (Cairnhill). Newfort is made up of a group of local investors interested in real estate development.

This is their second purchase after buying residential estate Chateau Eliza, at Mount Elizabeth, for $92.2 million last September.

The Kismis Lodge development comprises 64 units of walk-up apartments housed in two four-storey blocks, built in the 1970s.

The collective sale was brokered by property consultants Jones Lang LaSalle (JLL).

In a statement, Ms Yong Choon Fah, national director of investments at JLL, said: "More than 80 per cent of the owners have consented in writing to Newfort's offer of $84.18 million, which translates to $1,198 psf...

"Kismis Lodge is zoned for three-storey mixed landed development under the 2008 Master Plan. No development charge is payable."

She added that the sale is subject to Strata Titles Board approval, and could be the largest mixed landed site sold collectively this year.

Based on the current guidelines by the Urban Redevelopment Authority, Newfort could build as many as 43 terraced houses or 32 semi-detached houses, subject to approval.

Kismis Lodge off Toh Tuck Road sits on 70,283 sq ft of land.

JLL also said: "Despite the few rounds of property cooling measures, the demand for landed developments is expected to be fairly strong because the target market is mainly Singaporean families.

"The ample living space within a landed property also appeals to multi-generation families."

It was reported in January that the owners were expecting a $90 million sale, which translates to $1.4 million per household.

Ms Yong said that each strata terrace at the newly developed site could fetch as much as $3.5 million to $4 million.

This sale marks the third successful collective sale deal done this year."

http://www.stproperty.sg/articles-proper...m/a/111390

Vested

[mosi]

4.Newfort Alliance (Kismis) Pte. Ltd is just a company set up to do this project and they have 70% share.

Pardon my ignorance.

Based on what I find publicly, it seems like, chronologically:

i) Jan 2013: Kismis Lodge was put up for collective sale
ii) 25 Mar 2013: Reportedly sold to Newfort Alliance (Cairnhill) Pte Ltd for $84.8m
iii) 8 Apr 2013: LKH announces that, through a wholly owned subsidiary, they subscribe for 700,000 shares of Newfort Alliance (Kismis) Pte Ltd

Based on these facts, I cannot see how Newfort Alliance (Kismis) is "just a company set up to do this project".

Well, at least the good thing is that there doesnt appear to be anything too shady.

The paid-up share capital of Kismis is SGD1,000,000.00 comprising 1,000,000 ordinary shares, of which 700,000 ordinary shares held by Eastpeak and 300,000 ordinary shares held by Newfort.

Not vested

__________________________________________________
My Margin Of Safety Investing thoughts http://www.mosi.sg

[greengiraffe]

Based on existing plot ratio of 1.4, total build up = 98396.2sf

Cost of land ppr = $84.18m/98396.2sf = $855.52ppr
Construction costs (low rise) = $300ppr
Breakeven = $1155.52 ppr
Developer margins 20% gross = $1387 psf

Is the breakeven price an achiveable one?

If so LKH share of pretax likely around $15.9m, net about $13m slightly less than 2 cents a share.

GG

[Greenrookie]

Based on existing plot ratio of 1.4, total build up = 98396.2sf

Cost of land ppr = $84.18m/98396.2sf = $855.52ppr
Construction costs (low rise) = $300ppr
Breakeven = $1155.52 ppr
Developer margins 20% gross = $1387 psf

Is the breakeven price an achiveable one?

If so LKH share of pretax likely around $15.9m, net about $13m slightly less than 2 cents a share.

GG

Hi GG,

How did you come up with the construction costs? i always have problem computing the break even cost especially if developer are ot forcoming with info

regards,
Greenrookie

[greengiraffe]

Based on existing plot ratio of 1.4, total build up = 98396.2sf

Cost of land ppr = $84.18m/98396.2sf = $855.52ppr
Construction costs (low rise) = $300ppr
Breakeven = $1155.52 ppr
Developer margins 20% gross = $1387 psf

Is the breakeven price an achiveable one?

If so LKH share of pretax likely around $15.9m, net about $13m slightly less than 2 cents a share.

GG

Hi GG,

How did you come up with the construction costs? i always have problem computing the break even cost especially if developer are ot forcoming with info

regards,
Greenrookie

Agar Agar lah... if you want to be a millionaire, you have to explore options mah - so most convenient, call a friend for help. He thinks that low rise can even do it at $200psf so I marked it up to $300psf for conservatism.

Anyway, since LKH owns 70% of project, if appointed as construction contractor, they may be able to make some money from the minorities 30%. Assuming 10% net margins still got some extra money.

GG

[a74henry]

Wah...sure make.

Construct - make money. Pre-sell to residents & get money for raw materials to construct. Progressive payments according to the payments schedule based on construction progress. Make 70% of profit from sales of property.

Worst case if market drops, rent out first until the market rises.

(Vested)

[FatBoi]

Hi ppl, there has been significant chat so far on the orderbooks, the latest moves for LKH. Any views on the level of gearing? from the latest results, interest bearing liabilities exceed shareholders' equity, is this sustainable given the current low interest environment? thanks.