SUTL enterprise (previously known as Achieva)

[dydx]

So so 2021-H1 result but surprised 10cent dividend!
About 20% over the last closed price of 50cent.
Seems like they think this pandemic is over.

Have we heard anyone infected with Covid while boating or fishing at sea with his family members or close friends?

[dydx]

I thought this recently released corporate video is quite revealing..
https://www.youtube.com/watch?v=PfYWNoAMMGI

It looks like more revenue and better profits are now possible.

[fallscushion]

The service & value provided by them are really niche.
Long term value is there and brand building seems to be there as well.
I guess it just requires a very long grinding times to build another 1 or more 1-15 in other countries.

So far they have been trying and the pipelines are there.
The question is always how long it takes for the efforts to be fruitful (especially to shareholders).

It is a long game! Investor jumping in should have long time horizon in mind to enjoy the game!
Huge net cash (the market cap almost entirely in cash) helps.

[dydx]

Based on last done at $0.585, and the 85.48m issued shares, SUTL Enterprise now has a market cap of $51.01m. This is equivalent to the average market value of a good-size GCB in districts 9, 10, or 11, or maybe 2 GCBs in Sentosa Cove. SUTL Enterprise owns and operates the profitable ONE°15 Marina Sentosa Cove and a majority stake in ONE°15 Marina Puteri Harbour under development, and manages a few marina development projects overseas from which the company derives management fees. As at 30Jun21, the group has a net cash reserve of $47.1m, equivalent to $0.55/share.

Certainly, SUTL Enterprise's business and assets should be worth a lot more than a GCB, no?

[dreamybear]

Without doing a dive deep into the company, based on general observation, I think GCB may not be a bad idea comparatively. Personally, if given the wealth and choice, I wld go for GCB. I perceive GCB as a stable investment without requiring as much effort and I wld focus my time/energy into investments which I think can give me better returns.

Based on SGX stk screener, EPS has been 0.03/0.04 in recent years. I am not familiar with the marina business - granted its valuation is attractive, may I know for the next 3 years : What are the risks and chances that its cash balances will be reduced ? Does it hold any realizable undervalued assets ? How does it fare with respect to its peers / competitors ? What are reasonable estimates for its annual EPS ?

----------------------------

Grab, Razer, Secretlab CEOs' recent property buys reveal their ultra high net worth standings
".....The first tech founder is 28-year-old Ian Ang, CEO of gaming chair maker Secretlab. He was reported to have snatched up not one but two luxury freehold properties at a whopping S$51 million.....Two other tech founders or their family – Grab’s CEO Anthony Tan and Razer’s CEO Tan Min-liang – are said to have bought or are considering buying GCBs worth between S$40 million and S$53 million......"
https://vulcanpost.com/753015/good-class...s-wealthy/

[dydx]

The best way is to take a good look at ONE°15 Marina Sentosa Cove. You can start by going through their official marina webpages to understand the facilities and services the marina offers to boat owners - especially how much the marina charges for wet/dry berthing and other services - by using below link..
https://one15marina.com/marina/overview/

Then consider taking advantage of Sentosa's current free entry offer and pay a visit to the marina itself to verify how full is the marina. Actually, you can see it from the official photos from the marina. While there, you should also try the super-value super-good a la carte dim sum buffet lunch during weekdays/weekend..
https://one15marina.com/wp-content/uploa...-apr21.pdf
https://one15marina.com/wp-content/uploa...-apr21.pdf

If the marina is full, SUTL Enterprise should continue to make steady good money and pays out dividends. New membership sales, membership transfer, the 26-room hotel, dining and events will bring in the extras on top of members' monthly subscriptions and marina berthing fees and services.

While enjoying lunch there, you can make your own calculations whether SUTL Enterprise as a business - including the net cash reserves - should be worth just one GCB (at say $50m), or two or even more.

[dydx]

Last FY21 the company paid out a surprise $0.10/share special dividend from its large cash reserve in its 1H results announcement. I wonder whether there is a chance of a repeat in the coming 1H results announcement?

[d.o.g.]

This company has attracted the attention of a micro-cap investor:

https://themikrokap.substack.com/p/marina-mania

However, I think he is making some errors:

1. Lease Expiry in 2034

With lease expiry only 11 years away, the company has to hoard cash, to either fund the lease extension and improvements, or to fund construction of a new marina somewhere else.

Note that the default government policy is to allow leases to expire without renewal:

https://www.sla.gov.sg/properties/land-s...ase-policy

The marina should be zoned commercial, so most likely lease extension will be contingent on land use intensification i.e. more buildings.

One benchmark: Marina Bay Sands construction cost was $8bn, and the lease extension included a $4.5bn expansion.

The original marina cost was about $100m (lease $32.5m + buildings $64.8m).
If we assume a pro-rata requirement, then the company has to budget about $54m for lease extension and complex expansion.

2. Deferred Membership

This cannot be ignored when looking at the company's cash position. It is broadly similar to insurance float: The members gave the company an asset (money) for their membership and the company must create a corresponding liability (the deferred membership). Each year, some of this liability is amortised and recognized as revenue, against which the company charges its operating expenses. The deferred membership liability should terminate in 2034, along with the lease itself.

3. Cash Flow

Cash flow is overstated, because about $4m a year is non-cash recognition of deferred membership income, while the company pays out cash for operations.

At the same time, the depreciation of PPE cannot be added back to cash flow because this amount has to go into a "sinking fund" pool that will be needed to fund construction of additional buildings, whether onsite or at a new marina if the lease is not extended.

4. Sea Level Risk

This company has all of its eggs in one basket. If sea levels rise (or fall) a lot, the marina complex may have to be renovated or rebuilt. The historical cost of the buildings was $64.8m. Future replacement cost is undoubtedly higher. Essentially, if you own this company, you are short climate change.

The absolute worst case scenario would be (i) the company pays a handsome sum to renew the lease for another 30 years and adds some new buildings, then (ii) sea levels rise or fall rapidly soon after, to the point that the marina modification cost is uneconomic and the entire marina is written off.

I don't know of any insurer that will underwrite such a risk, so most likely the company - and therefore its shareholders - are bearing this risk. I say the same thing to friends about waterfront property - no matter how much you like it, don't buy it, at most just rent it if you must have the lifestyle.

Just an alert to "cheap stock" investors who might be attracted by the zero debt, high cash balance, low PE, high yield, pricing power etc.

YMMV.

[Big Toe]

On sea level risk in general. Most experts cant agree on how much sea water will rise. But we do know that Singapore's sea water level have risen 14cm from pre 1970.(Source Earth.org) That's 50+ years for a 14cm rise. Even though no one knows for certain what will it be like in the next 50 years, it is quite safe to assume that it will not be very drastic. So it is relatively safe to say in our lifetime(esp mine), things will be remain very much the same. East coast park will still be around. I am more concerned about the increasing temperatures/volatile climate more than increase in sea level. Climate change affects everyone.

Onto sea side properties. I love them but canot afford them. I do have friends staying very near east coast park and the strong salty air do destroy/shorten the life of a lot of appliance, equipment and furnishings. Corrosion can be seen everywhere and the windows need to be kept closed most of the time.

But would I buy one to stay given a choice, absolutely! It is the feeling of waking up to the sea. It refreshes the mind and cleanses the soul. (at least for me) The upkeep will cost much more for sure. But it is far better than staying in the densely packed $2-3+M leasehold condonimum with no window in your kitchen. The average new condo nowadays is just sad.

Would I want to own and stay in a sea side property, hell yes, but would I invest in a sea side residential property, well no. Would I buy a modest sized yatch if I had the money, yes.

[Big Toe]

Let me air my views on one15marina

1. Lease Expiry in 2034. Most likely they will be granted a long lease extension at a reasonable rate. Sentosa is not on mainland Singapore. The master plan calls for Sentosa and P.Brani to be a leisure, recreation, tourism destination. So much so that I do believe URA+Sentosa Development Corp(MTI) would actually want to have them stay on as part of their very long term plan and have them expand their offerings onto P.Brani since berthing is at full capacity. One15marina adds vibrancy to senstosa, which is exactly what the authorities want. One can also look at Sentosa Golf Club which have their leases extended w/o conditions.

2&3. True only based on the assumption that there is clear indication that there will not be any extension of lease. Even in the worst case scenario, they will be informed very early on and at least be granted some a number of years of extension before being asked to leave. Again the chances of not extending the lease for the very long term is remote.

For country clubs, lease extensions may come with additional costs for its members if they wish to continue to be a member. For yatch owners, it is usually small change if you consider how much money is spend on the yatch, berthing, upkeeping.
Golfing is expensive. Yatching is on another level of expensive.