To be fair, with the exception of REITs, I can't think of many listed companies with a large rental income stream trading at their RNAV level. Companies such as Hwa Hong (freehold UK, SG assets), Ho Bee Land (prime UK properties and Metropolis), HK Land (crown jewels all over Asia) and UIC (owns Singland) trade at a significant discount to their RNAV. I won't find it surprising that BP (owns leasehold industrial properties) trade at a discount too. Perhaps, this is due to the RNAV failing to capture the PV of the corporate and tax cost in these corporate entities.
I would prefer valuing BP using the income stream method since it is unlikely to be liquidated. I have no idea what income stream the D&B division will post. But as you have mentioned, the DB&L earnings should be easily extrapolated. More contracts, more earnings. The converse is also true.
(Not Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
31-05-2015, 02:13 AM (This post was last modified: 31-05-2015, 02:18 AM by Curiousparty.)
Tks Nick.
Key is its recurring income. For 2015, there will be 4 additional properties completed in 2014 which would greatly enhance its recurring income. (page 2 of prospectus).
[2 new + 2 partial new]
Trading at deep discount to RNAV is just one of the many metrics but not necessary the key one. Key is the innovation of the management.
But pls also note that it has "properties held for sales" placed under "current assets". If these are sold off, then revaluation gains would be realized.
Book value of these held-for-sales assets = $30mil.
Market valuation (page 2 of prospectus) = $107.6mil
Revaluation gain= ~$0.24.
(31-05-2015, 01:45 AM)Nick Wrote: To be fair, with the exception of REITs, I can't think of many listed companies with a large rental income stream trading at their RNAV level. Companies such as Hwa Hong (freehold UK, SG assets), Ho Bee Land (prime UK properties and Metropolis), HK Land (crown jewels all over Asia) and UIC (owns Singland) trade at a significant discount to their RNAV. I won't find it surprising that BP (owns leasehold industrial properties) trade at a discount too. Perhaps, this is due to the RNAV failing to capture the PV of the corporate and tax cost in these corporate entities.
I would prefer valuing BP using the income stream method since it is unlikely to be liquidated. I have no idea what income stream the D&B division will post. But as you have mentioned, the DB&L earnings should be easily extrapolated. More contracts, more earnings. The converse is also true.
(Not Vested)
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
31-05-2015, 07:32 AM (This post was last modified: 31-05-2015, 05:15 PM by CityFarmer.)
Properties held for sale and investment properties are definition legacy issues from Boustead Singapore. They are the same. Investment properties only start to emerge after a certain year. Co claimed that accountant adviced them to adopt a different accounting definition.
[Edited by moderator]
BP just like the parent are more eager to keeping building their portfolio rather than selling them anytime soon.
Key is its recurring income. For 2015, there will be 4 additional properties completed in 2014 which would greatly enhance its recurring income. (page 2 of prospectus).
[2 new + 2 partial new]
Trading at deep discount to RNAV is just one of the many metrics but not necessary the key one. Key is the innovation of the management.
But pls also note that it has "properties held for sales" placed under "current assets". If these are sold off, then revaluation gains would be realized.
Book value of these held-for-sales assets = $30mil.
Market valuation (page 2 of prospectus) = $107.6mil
Revaluation gain= ~$0.24.
(31-05-2015, 01:45 AM)Nick Wrote: To be fair, with the exception of REITs, I can't think of many listed companies with a large rental income stream trading at their RNAV level. Companies such as Hwa Hong (freehold UK, SG assets), Ho Bee Land (prime UK properties and Metropolis), HK Land (crown jewels all over Asia) and UIC (owns Singland) trade at a significant discount to their RNAV. I won't find it surprising that BP (owns leasehold industrial properties) trade at a discount too. Perhaps, this is due to the RNAV failing to capture the PV of the corporate and tax cost in these corporate entities.
I would prefer valuing BP using the income stream method since it is unlikely to be liquidated. I have no idea what income stream the D&B division will post. But as you have mentioned, the DB&L earnings should be easily extrapolated. More contracts, more earnings. The converse is also true.
Moderation needed in this thread, with posts focus more on individual, than on topic discussed. Some of the posts seem overly aggressive for the sake of a constructive discussion.
(30-05-2015, 09:19 PM)Curiousparty Wrote: page 119 of prospectus already mentioned about the declining rental indices observed in 2014. How could the valuers not have taken this into account ???
(30-05-2015, 06:24 PM)r0n Wrote:
(30-05-2015, 02:51 PM)Curiousparty Wrote: The value of properties reflected under investment properties was only ~$160mil as of March 2015.
However, in the prospectus (page 2), the total valuation (if you bother to tally up) = $407 mil. But we need to deduct out the portion not owned by BP (i.e. 50% equity in Boustead Centre).
After this has been done, we get $388mil. But let's not forget about the 15th and 16th projects recently brought into the portfolio. Assuming a conservative lease rate of $1.4 PSF and 12 years lease period, we obtain $13mil valuation for these 2 projects.
So, the total valuation for all 16 properties in the portfolio will be $401mil.
(The valuation was only done recently and could be very conservative, reflecting the current somber mood in the market...)
Compare this figure of $401mil with the value above $160mil (investment properties reflected on books)
A quick note that all this revaluation was done in 30 Sept 2014 in view of the demerger, hence it may not reflect the current mood in the market.
Dear CP, did not meant that valuers did not take into account, but that my opinion is that the valuation date sentiments and the current market sentiments are different.
(30-05-2015, 09:19 PM)Curiousparty Wrote: page 119 of prospectus already mentioned about the declining rental indices observed in 2014. How could the valuers not have taken this into account ???
(30-05-2015, 06:24 PM)r0n Wrote:
(30-05-2015, 02:51 PM)Curiousparty Wrote: The value of properties reflected under investment properties was only ~$160mil as of March 2015.
However, in the prospectus (page 2), the total valuation (if you bother to tally up) = $407 mil. But we need to deduct out the portion not owned by BP (i.e. 50% equity in Boustead Centre).
After this has been done, we get $388mil. But let's not forget about the 15th and 16th projects recently brought into the portfolio. Assuming a conservative lease rate of $1.4 PSF and 12 years lease period, we obtain $13mil valuation for these 2 projects.
So, the total valuation for all 16 properties in the portfolio will be $401mil.
(The valuation was only done recently and could be very conservative, reflecting the current somber mood in the market...)
Compare this figure of $401mil with the value above $160mil (investment properties reflected on books)
A quick note that all this revaluation was done in 30 Sept 2014 in view of the demerger, hence it may not reflect the current mood in the market.
Dear CP, did not meant that valuers did not take into account, but that my opinion is that the valuation date sentiments and the current market sentiments are different.
Yes, agreed.
Which is why valuation is supposed to take place annually.
Of course they cant constantly value it, so within a year, you can estimate it fairly accurate based on last valuation (whether it has risen or fallen)
if one were to refer to Annex G of the prospectus, one would notice that many of BP properties have remaining lease of more than 50 years.
Just a very ballpark estimation using 30-year lease price PSF of $377.
BP has ~ 2 mil sq ft of properties. (those who have qualms may remove non-BP equity, but this is just a quick macro sensing).
Multiplying the 2 rates together, we have ~$750il worth of valuation, against market cap of less than $300mil now.
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
01-06-2015, 11:08 AM (This post was last modified: 01-06-2015, 11:11 AM by Curiousparty.)
outstanding shares = 320mil.
For investment properties, it is reflected at "original book value - accumulated depreciation" (i.e. carrying value) in the balance sheet.
To get actual market valuation, BP would engage consultants to do so. (page 2 of prospectus)
(01-06-2015, 02:21 AM)calebseah Wrote: Hey guys,
How did you guys to calculate the RNAV?
I Was reading the latest unaudited result,
Using Net Asset = 252,645,000
Outstanding shares = 15,000,000
I got a big number of $16.843... Did i get it wrongly?
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
I noticed that there is request for you to declare the vested interest. Please declare the interest in your next post, for the benefit of readers, as an active buddy in this thread.
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