17-08-2015, 10:05 AM (This post was last modified: 17-08-2015, 10:06 AM by vesfreq.)
Dear folks (and bro CP),
Special thanks to CP for contributing on his viewpoints on BPL. Attached is my excel. I am not a trained or professional stock analyst. But using what I could find on Mr Google, I managed to derive some other views on BPL.
1. Capitaland and CDL trades about 11 times PE. That seems like the rough benchmark to price BPL. But, my valuation uses 10 times instead. Thats what BP is doing in the recent friday's close.
2. I made a conservative assumption that the development revenue and assumed that the book order value of 214m sgd. This is surely lower than 2015's 229m sgd. It sounds about right, since construction and development should be slowing down, rather than speeding up.
3. On the basis of point 2, I took the discounted return income add to the assumed 214m sgd revenue. 214m sgd forms the basis of my analysis. Feel free to contribute other perspectives regarding this. I am just thinking aloud.
4. GFA of leasehold industrial property is 181,860 sqm according to the fy2015 AR. With development projects
5. I assumed a 5% operating cost inflation over the average of 2015 and 2014 figures.
6. Using lower gross margin of 22.5% and assumption of 10 times PE, BPL fair value should be 85 cents and higher. This is also with a 60% discount over the total potential rental incomes which BPL could have been making. 60% discount presumably should account for all dead weight space and corridors.
7. My calculated rental yield (using assumption of 300 to 400 psf cost) gives about 4.4% to 4.88%. Workings provided in the spreadsheet. (workings may look out of the world, but feel free to contribute if there is some better way to look at the figures).
Some acquaintances also were very quick to query why prices are so low then. There is the usual reason that its the entire global and domestic economy. As such, there is weak buying interest and thus causing prices to be depressed. As per the AR 2015, one obvious issue is the challenging economic climate, as in more competition. Upside however is that the order book is healthy at this point (214m sgd).
With market cap of 250m sgd +- today, the order book is about 85% of the market cap. Its interesting and good assurance that BPL should be able to create value, but in due course i believe.
Vested today.
Aside from the above mentioned, there may also be other reasons for weak prices. Buyers and sellers dictate prices. If they are not coming in, it will be tough.
The thing I am scared most is not nightmares or market crashes..... Its my greed that I fear the most.
When people ask what is my target price, I never have any good answer for it because Philip Fisher said before (in Common Stock Uncommon Profit) that the best time to sell is never. Equity investment is buying into ownership, not betting slips.
The path to greatness and wealth is necessarily dangerous.... because greed is a fearsome fore that threatens your success at every step.
Special thanks to CP for contributing on his viewpoints on BPL. Attached is my excel. I am not a trained or professional stock analyst. But using what I could find on Mr Google, I managed to derive some other views on BPL.
1. Capitaland and CDL trades about 11 times PE. That seems like the rough benchmark to price BPL. But, my valuation uses 10 times instead. Thats what BP is doing in the recent friday's close.
2. I made a conservative assumption that the development revenue and assumed that the book order value of 214m sgd. This is surely lower than 2015's 229m sgd. It sounds about right, since construction and development should be slowing down, rather than speeding up.
3. On the basis of point 2, I took the discounted return income add to the assumed 214m sgd revenue. 214m sgd forms the basis of my analysis. Feel free to contribute other perspectives regarding this. I am just thinking aloud.
4. GFA of leasehold industrial property is 181,860 sqm according to the fy2015 AR. With development projects
5. I assumed a 5% operating cost inflation over the average of 2015 and 2014 figures.
6. Using lower gross margin of 22.5% and assumption of 10 times PE, BPL fair value should be 85 cents and higher. This is also with a 60% discount over the total potential rental incomes which BPL could have been making. 60% discount presumably should account for all dead weight space and corridors.
7. My calculated rental yield (using assumption of 300 to 400 psf cost) gives about 4.4% to 4.88%. Workings provided in the spreadsheet. (workings may look out of the world, but feel free to contribute if there is some better way to look at the figures).
Some acquaintances also were very quick to query why prices are so low then. There is the usual reason that its the entire global and domestic economy. As such, there is weak buying interest and thus causing prices to be depressed. As per the AR 2015, one obvious issue is the challenging economic climate, as in more competition. Upside however is that the order book is healthy at this point (214m sgd).
With market cap of 250m sgd +- today, the order book is about 85% of the market cap. Its interesting and good assurance that BPL should be able to create value, but in due course i believe.
Vested today.
Aside from the above mentioned, there may also be other reasons for weak prices. Buyers and sellers dictate prices. If they are not coming in, it will be tough.
Did you guys notice a 6769,800 shares married deal done at 76 cents? It was a single trade done today.
The thing I am scared most is not nightmares or market crashes..... Its my greed that I fear the most.
When people ask what is my target price, I never have any good answer for it because Philip Fisher said before (in Common Stock Uncommon Profit) that the best time to sell is never. Equity investment is buying into ownership, not betting slips.
The path to greatness and wealth is necessarily dangerous.... because greed is a fearsome fore that threatens your success at every step.
Ff purchase is probably a testament to the stock being undervalued.
The thing I am scared most is not nightmares or market crashes..... Its my greed that I fear the most.
When people ask what is my target price, I never have any good answer for it because Philip Fisher said before (in Common Stock Uncommon Profit) that the best time to sell is never. Equity investment is buying into ownership, not betting slips.
The path to greatness and wealth is necessarily dangerous.... because greed is a fearsome fore that threatens your success at every step.
Ff purchase is probably a testament to the stock being undervalued.
That is without a doubt. If he doesn't buy, who will?
However, he is a businessman. A top notch one. He has constantly been buying Boustead Singapore - hasn't sell a single share so far but it doesn't explain why Boustead Singapore share price has been falling.
FF Wong has a long term businessman time horizon. How many of us investors can share his views?
I admit I didn't have his long term view and has reduced from a top core holding from my portfolio to one that I am monitoring for the next cycle.
Ff purchase is probably a testament to the stock being undervalued.
That is without a doubt. If he doesn't buy, who will?
However, he is a businessman. A top notch one. He has constantly been buying Boustead Singapore - hasn't sell a single share so far but it doesn't explain why Boustead Singapore share price has been falling.
FF Wong has a long term businessman time horizon. How many of us investors can share his views?
I admit I didn't have his long term view and has reduced from a top core holding from my portfolio to one that I am monitoring for the next cycle.
Vested
Certificate, Odd Lots
GG
You have rightly pointed out the issues regarding the development revenues. Once bp rides out of this trade cycle, it should do fine riding up the next economic trade cycle. This economic downturn is pretty bad. Good biz can become bad biz and bad biz becomes worse. But wait, good mgmt is a constant, regardless of trade cycles.
Like you, bp not my core holding. Holding anti cyclical core stocks instead.
The thing I am scared most is not nightmares or market crashes..... Its my greed that I fear the most.
When people ask what is my target price, I never have any good answer for it because Philip Fisher said before (in Common Stock Uncommon Profit) that the best time to sell is never. Equity investment is buying into ownership, not betting slips.
The path to greatness and wealth is necessarily dangerous.... because greed is a fearsome fore that threatens your success at every step.
Homepage
PR Newswire
