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From what I observe the steady rise is not just due to news leak but very non stop buying by parties which seem to squeezing those who shorted the stock.
For High Park its not a one time booking for profit, so I think it will be recognized slowly. I think KSH will post steadily good profits for next 2-3 years due to its interest in good sales projects like NeWest, KAP, HIgh Park etc. But the stock has outperformed other property counters so I am hoping the rest will catch up. Still many people don't like to own property stocks but I think price wise they have bottomed a few months ago. The glut of completions in 2016/7 if it means prices don't fall too low during that time, is probably the bottom of property prices in Singapore. Property stock prices move ahead of this u-turn, so I expect this sector to be revalued up in 2016/7.
Many property stocks now trade at 40-60% discount to RNAV which is definitely not the top of the stock price cycles and more closer to the bottom of the charts before they rise again.
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I thought initially high park residence is progressive recognition. But the table from pg 15 in this qrt result showed revenue recognition method is on project completion.
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KSH's 49%-owned associated company acquired freehold land at 20 Lorong 35, Geylang.
KSH Holdings Limited wishes to announce that Development 35 Pte. Ltd. ("Development 35"), a 49%-owned associated company held by the Group, has completed the acquisition of the property situated on freehold land at 20 Lorong 35, Geylang Singapore (the “Land”) on 11 July 2016. The Land has an area of approximately 1,115 square metres.
The purchase consideration for the acquisition is S$20,000,000, which was negotiated on a willing-buyer-willing-seller basis and the Vendor is an independent and unrelated third party.
Development 35 intends to develop a block of 8-storey residential flats with roof terrace and swimming pool on the Land, subject to obtaining all the necessary approvals from the relevant authorities.
Specuvestor: Asset - Business - Structure.
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KSH’s surge over the past few days is probably due news about China’s latest Special Economic Zone (SEZ) is located right next to their Sino-Singapore Health City JV in Gaobeidian.
Recap that KSH, Oxley, Lian Beng and Heeton have a huge development there that spans 393,335 sq m and a GFA of 1,234,000 sqm or nearly 13.3 million sq ft.
This is a huge multi-year project that gives visible earnings for a good number of years. Reports that property prices in the new SEZ have more than doubled due to the news and
govt moves to stop excessive speculation in this new area have suggested that buyers could move to invest in property in nearby GBD instead. This augurs well for the JV’s launches,
the first of which should take place this year. If the JV is able to raise prices and sell out the units quickly, estimates of its future revenues and profits will be raised, spurring
revaluation in the 4 counters.
As a quick analysis of how much these companies will benefit, here are some figures based on a report on Edge Daily, just for Phase 1 of the project alone.
Profit:
KSH $159m, boosting NAV by 35ct per share
Heeton $72m, NAV up 16ct
Lian Beng $77m, NAV up 17ct
Oxley $195m, NAV up 7ct
Comparing these earnings with their respective market cap as of yesterday:
KSH mkt cap: $344m profit: $159m. Profit as a % of mkt cap: 46%
Heeton mkt cap: $136 Profit: $72m Profit as % of mkt cap: 53%
Lian Beng $307 Profit: $77m. Profit as % of mkt cap: 25%
Oxley $1.775b Profit: $195m. Profit as %of mkt cap: 11%
From the above, it seems that KSH and Heeton will benefit the most from the GBD JV. KSH’s surge has far outpaced the other counters, but Heeton's smaller rise seems to point to it flying under the radar for now.
As KSH is one of my core stocks, I had noticed that its share price looks purposely suppressed at the 53-55ct level for a long time. Perhaps it's this artificial suppression that led to the price surge as the bear’s balloon gets burst.
Heeton's relative smaller price rise is probably due to investors' not so favourable perception of mgt and major shareholders' past records, but the stock has a very profitable JV with CES and KSH in High Park Residences that is mainly not accounted for yet, plus its big exposure (relative to its mkt cap) in the above GBD project. In additon, its NAV is currently above $1, giving the stock a deep discount to its NAV and a even deeper discount of over 70% to its RNAV.
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I think there may some some error in Edge figures on the respective NAV boost from Phase 1 of GBD project.
The right fgiures are:
Lian Beng's 10% stake should yield it only $71m, which translates to 14.2cts per share.
Heeton's 7.5% stake yields it $53.25m, translating to 16.4ct per share.
Best exposure: Ksh (35ct per share)
Next best exposure: Heeton (16.4ct)
Next: Lian Beng (14.2ct)
Last: Oxley (7ct)
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