16-07-2014, 07:29 PM (This post was last modified: 16-07-2014, 09:11 PM by Curiousparty.)
this is my profit model for the Nine Residence and Junction 9.
in summary, we are looking at a Mean Net profit of $150mil or 23 cents EPS.
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Adding Nine Residence to the earlier Alexandra Central where obscene profits have been ripped off the buyers, we are seeing a possible $1 increase in NAV for CES. This has not factored in other big projects like TM in Australia, etc.
Now, we know why the company is buying back its share at 76 cents
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It is good to recap Phillip Capital analysis (Feb2013) of CES future earnings (Feb2013).
Vested.
(16-07-2014, 07:57 PM)Curiousparty Wrote: Adding Nine Residence to the earlier Alexandra Central where obscene profits have been ripped off the buyers, we are seeing a possible $1 increase in NAV for CES. This has not factored in other big projects like TM in Australia, etc.
Now, we know why the company is buying back its share at 76 cents
Based on the latest transaction for a 3-star hotel, the rate per room was already $0.756mil, and the location is LITTLE INDIA.
So, it might not be UNreasonable to assume at least $0.8mil per hotel room at Alexandra Central. I have assumed a conservative $0.9mil per room.
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Large shopping centre including mall = 2542 per m2 or 236 PSF.
Add in cost of inflation for a few years. $600 PSF is simply too high.
(see attached report page 26 on Singapore.
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17-07-2014, 12:09 AM (This post was last modified: 17-07-2014, 12:19 AM by Curiousparty.)
I have used 2 rates for the cost of construction, one for the retail space (medium quality) and one for a 4-star hotel, and added in an extra allowance of 15% for total project cost overrun.
The weighted ave cost of construction for the 2 segments worked out to be $440 PSF. (way below the $600 PSF assumed by Philips Research)
Pls see the updated computation.
The equity created is still cost to $0.5 billion
(after all the above conservative assumptions)
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17-07-2014, 08:09 AM (This post was last modified: 17-07-2014, 09:08 AM by Curiousparty.)
Just to sum up again why the report by Phillip research had grossly understated the profit gain from Alex Central.
(probably done for obvious reasons, wink wink)
a. Hotel valuation per room for a recent 4-star hotel transaction is already in the region of $1mil per key. The chap only assumed $0.5mil per key. I only assumed $0.8mil per key (very conservative). This difference alone already accounted for 20 cents EPS.
b. How can the construction cost be $600 PSF for retail and hotel segment (based on entire GFA). Don't think CES is building a MBS hotel or MBS-quality retail mall (restraining laughter.....). For this, I have used the recent published rate of construction in Spore for the 2 different segments (medium quality retail + 4-star hotel), with inflation incorporated to arrive at a very conservative rate of $440PSF for the entire GFA. As the retail units were all snapped up within a very short period of time, we can expect the marketing cost to be minimal.
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17-07-2014, 08:14 AM (This post was last modified: 17-07-2014, 08:15 AM by Curiousparty.)
In short the assumptions used by the chap may be flawed.
or he might be CORRECT. Let the value buddies decide for themselves
(16-07-2014, 10:21 PM)Ray168 Wrote: It is good to recap Phillip Capital analysis (Feb2013) of CES future earnings (Feb2013).
Vested.
(16-07-2014, 07:57 PM)Curiousparty Wrote: Adding Nine Residence to the earlier Alexandra Central where obscene profits have been ripped off the buyers, we are seeing a possible $1 increase in NAV for CES. This has not factored in other big projects like TM in Australia, etc.
Now, we know why the company is buying back its share at 76 cents
[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.]
17-07-2014, 08:17 AM (This post was last modified: 17-07-2014, 08:36 AM by Curiousparty.)
IMHO, for the 2 projects alone (Alex central + 9 residence/junction), we are looking at NAV increase of around $0.70 to more than $1.0 based on VERY conservative assumptions. If we add in construction segment profit and other projects, we are looking at about $2 intrinsic value easily.
For example, if some big PRC investment company comes in to buy up the hotel space at Alex (which is very likely given its prime location - Gateway to Sentosa), we should be looking at valuation of $1mil at least per room. (additional 15 cents more). But my figure above only assumed $0.8mil per room. There are also recurring income stream of around $20mil per year.
Now, we know why company is buying back their own shares at $0.76 cents (few mil shares).
There might be many rounds of special dividends to reward loyal shareholders.
(17-07-2014, 07:07 AM)bpequity Wrote: Curiousparty, beside the potential increase in div, what is your expected intrinsic value of this counter?
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