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04-08-2018, 02:14 PM
Hi Terry, here is my take on KSH’s valuation:
1. My personal valuation of the RNAV of the stock: (a) present NAV is 70.37ct (b) Potential NAV from sales at Affinity, Riverfront, Park Colonial, High Park, Geylang Lor 24 project and a sprinkle of unsold units elsewhere in Singpaore: 21.6ct; © Potential hotel revaluation surplus/redevelopment profits in the UK: 10ct; (d) Future earnings from Gaobeidian projects: 50ct (conservative). Total RNAV: About $1.52. Looking at NAV alone is not enough.
2. Positive surprise from Gaobeidian: It’s difficult to make a good estimate of the KSH consortium’s huge site at GBD, as the bulk of the land has not been given approvals for development. But patience may be rewarded as the size of the land and the proximity to Xiongan New Area means a slow and steady flow of development projects here (estimated 48,000 residential units and unknown size of commercial sites) over the next 10 years, at probably higher and higher selling prices. In one report I read, Oxley estimated that they could make as much as S$1.35b profit for its share at this site. This extrapolates to S$1.1b profit (S$1.94 per share) for KSH based on its smaller 22.5% stake in it. But with lots of uncertainty with regards to approvals and pricing, it’s hard to put a solid figure onto its worth. Nevertheless, KSH may benefit from a steady flow of residential units for sale from this site, promising it steady profit and cash inflow over a good 10 years.
3. Value of its honest, friendly, generous major shareholders and management: Priceless
I believe the above explains in part why KSH shares trade at a smaller discount to its NAV compared to other smaller developers. A reasonable dividend yield of about 3.5% also allows long term investors to patiently wait for positive news flows (to drive the share price up) while collecting a yearly dividend much higher than parking their money in the bank. The present NAV of above 70ct also gives the stock a bit of price support.
1. My personal valuation of the RNAV of the stock: (a) present NAV is 70.37ct (b) Potential NAV from sales at Affinity, Riverfront, Park Colonial, High Park, Geylang Lor 24 project and a sprinkle of unsold units elsewhere in Singpaore: 21.6ct; © Potential hotel revaluation surplus/redevelopment profits in the UK: 10ct; (d) Future earnings from Gaobeidian projects: 50ct (conservative). Total RNAV: About $1.52. Looking at NAV alone is not enough.
2. Positive surprise from Gaobeidian: It’s difficult to make a good estimate of the KSH consortium’s huge site at GBD, as the bulk of the land has not been given approvals for development. But patience may be rewarded as the size of the land and the proximity to Xiongan New Area means a slow and steady flow of development projects here (estimated 48,000 residential units and unknown size of commercial sites) over the next 10 years, at probably higher and higher selling prices. In one report I read, Oxley estimated that they could make as much as S$1.35b profit for its share at this site. This extrapolates to S$1.1b profit (S$1.94 per share) for KSH based on its smaller 22.5% stake in it. But with lots of uncertainty with regards to approvals and pricing, it’s hard to put a solid figure onto its worth. Nevertheless, KSH may benefit from a steady flow of residential units for sale from this site, promising it steady profit and cash inflow over a good 10 years.
3. Value of its honest, friendly, generous major shareholders and management: Priceless
I believe the above explains in part why KSH shares trade at a smaller discount to its NAV compared to other smaller developers. A reasonable dividend yield of about 3.5% also allows long term investors to patiently wait for positive news flows (to drive the share price up) while collecting a yearly dividend much higher than parking their money in the bank. The present NAV of above 70ct also gives the stock a bit of price support.
