SingHoldings    Last:0.495    -0.005

Sing Holdings - Grossly undervalued

oh yah, unlike the previous project for which profits were recognized from FY2017 to FY2022, North Gaia EC will be recognized only upon TOP in FY2025.  Surely a more than $100m 1 shot recognition of net profit should have some positive impact?  While this announcement is at least 2 years away, surely the market will be a bit more foward looking than that?

The revenue from Parc Botannia was $730.8m and net profit was around $146m and Sing Holdings had a 70% stake which amounted to $102m.  For North Gaia, the projected sales value is $860m and Sing Holdings owns 100% of it.  While the margins were slightly higher for Parc Botannia, the dynamics for North Gaia are similar.  Lowest land cost selling at the lowest price in Singapore while at above average margins.  Both projects did not sell quickly which enabled Sing Holdings to ultimately maximise profits by raising prices as subsequent new launches were significantly more expensive.  Construction costs were also locked in at a low fixed rate in 2020.  I quote below from the 24 May 2021 announcement of Minutes to AGM:
     
" The CEO noted that the same shareholder asked if the Group has secured a main contractor and locked in the cost of construction for this project as the recent news on migrant workers has caused concerns over increasing costs and delayed timelines, and how the Group is managing this risk. The CEO shared that the Group has appointed a main contractor and entered into a fixed lump sum contract immediately upon award of the land."

investshare      ( Date: 26-Aug-2023 11:09) Posted: But this is not the first project it completed. The same cash flow happened for past projects, if those failed to bring shares up, what makes this project different? TAN888      ( Date: 25-Aug-2023 23:38) Posted: Well explained. From a business perspective, in the current landscape, they could keep a close eye on good opportunities. The share prices could run up since there is an expectancy of high dividends with North Gaia TOP. But at the same time, they would be pressed to acquire a project - 2 years before TOP of North Gaia, so there is no gap in income as it takes 1.5- 2 years for selling to commence for any project. But would need extremely good foresight, with a view of the interest rates and high land prices. For investment properties, returns are lower and slower and subjected to impairments or potential forex impacts if done overseas. Given the growing size of Sing Holdings, allocation of funds would need be more deliberate in search of higher yields, if Management wants to grow the company sustainably in the long run.

 

From an investment point of view, the fact that the share price is similar to where it is even before the last Parc Botannia project was launched means that buyers of the shares are now getting 2 projects (spread across 8 years) worth of exceptional profits for free.  This definitely increases the margin of safety significantly.  While the shares are being " punished" together with other property developers in the short term as the market assumes all developers suffer during this period of increasing interest rates, some differentiation has been observed after adjusting for the dividends of the past 10 years.  Sing Holdings has definitely outperformed Oxley, Citydev and now even Wing Tai for example.in terms of share price. 

The company' s NAV started FY2013 at $0.5068 and as at end FY2022, its NAV is $0.7855 despite having given out $0.12175 in dividends during that 10 year period.  We have not even built in any profits from North Gaia yet but conservatively the NAV should exceed $1.00 by the time it TOPs in FY2025.   

investshare      ( Date: 26-Aug-2023 11:09) Posted: But this is not the first project it completed. The same cash flow happened for past projects, if those failed to bring shares up, what makes this project different? TAN888      ( Date: 25-Aug-2023 23:38) Posted: Well explained. From a business perspective, in the current landscape, they could keep a close eye on good opportunities. The share prices could run up since there is an expectancy of high dividends with North Gaia TOP. But at the same time, they would be pressed to acquire a project - 2 years before TOP of North Gaia, so there is no gap in income as it takes 1.5- 2 years for selling to commence for any project. But would need extremely good foresight, with a view of the interest rates and high land prices. For investment properties, returns are lower and slower and subjected to impairments or potential forex impacts if done overseas. Given the growing size of Sing Holdings, allocation of funds would need be more deliberate in search of higher yields, if Management wants to grow the company sustainably in the long run.

 

Hence the share price could run up with the expectancy of TOP and higher dividends. However, if it does not acquire another profitable project to bridge the gap of years without project income (rental aside), it might go into lull, and thereby leading to more discount to NAV (allowing existing shareholders an extended runway to acquire the shares at interesting prices).

Investing is different strokes for different folks. Sing Holdings has an experienced, sharp yet conservative management (good balance with managing risk and reward). The shareholders who choose to remain would likely need to have the same mindset. The management is also drawing a mildly decent remuneration.

The challenge with investing in property development projects - privately or publicly, is that income is lumpy and harder to gauge, hence the value trap or discount-to-NAV given that developers also need to recycle the funds in acquiring ever increasing land prices, and limiting any significant payouts until the majority owners decide to privatise the company or if there is any major transactions, thereby allowing the owners to realise the gains at certain timings.

investshare      ( Date: 26-Aug-2023 11:09) Posted: But this is not the first project it completed. The same cash flow happened for past projects, if those failed to bring shares up, what makes this project different? TAN888      ( Date: 25-Aug-2023 23:38) Posted: Well explained. From a business perspective, in the current landscape, they could keep a close eye on good opportunities. The share prices could run up since there is an expectancy of high dividends with North Gaia TOP. But at the same time, they would be pressed to acquire a project - 2 years before TOP of North Gaia, so there is no gap in income as it takes 1.5- 2 years for selling to commence for any project. But would need extremely good foresight, with a view of the interest rates and high land prices. For investment properties, returns are lower and slower and subjected to impairments or potential forex impacts if done overseas. Given the growing size of Sing Holdings, allocation of funds would need be more deliberate in search of higher yields, if Management wants to grow the company sustainably in the long run.

 

But this is not the first project it completed. The same cash flow happened for past projects, if those failed to bring shares up, what makes this project different?

TAN888      ( Date: 25-Aug-2023 23:38) Posted: Well explained. From a business perspective, in the current landscape, they could keep a close eye on good opportunities. The share prices could run up since there is an expectancy of high dividends with North Gaia TOP. But at the same time, they would be pressed to acquire a project - 2 years before TOP of North Gaia, so there is no gap in income as it takes 1.5- 2 years for selling to commence for any project. But would need extremely good foresight, with a view of the interest rates and high land prices. For investment properties, returns are lower and slower and subjected to impairments or potential forex impacts if done overseas. Given the growing size of Sing Holdings, allocation of funds would need be more deliberate in search of higher yields, if Management wants to grow the company sustainably in the long run. stockinvestor      ( Date: 25-Aug-2023 16:44) Posted: Base on the caveats, 62 units have been sold in July and August, sales revenue is $86,477,000.  Taking a simple 20% reveiced for deferred payment, that' s at least $17.3m in cash inflow from the sales so far in H2.  Traditionally about 60% of the units have attracted buyers on deferred payment.  There however seems to be an increase to 70% recently possibly due to the increase in interest rates for home loans.  Since Sing Holdings is charging 4% more for the entire unit' s price, projected revenue is now likely to hit $860m for this project assuming 50% of the remaining buyers take up deferred payment.

 

Well explained.

From a business perspective, in the current landscape, they could keep a close eye on good opportunities. The share prices could run up since there is an expectancy of high dividends with North Gaia TOP.

But at the same time, they would be pressed to acquire a project - 2 years before TOP of North Gaia, so there is no gap in income as it takes 1.5- 2 years for selling to commence for any project. But would need extremely good foresight, with a view of the interest rates and high land prices.

For investment properties, returns are lower and slower and subjected to impairments or potential forex impacts if done overseas.

Given the growing size of Sing Holdings, allocation of funds would need be more deliberate in search of higher yields, if Management wants to grow the company sustainably in the long run.

stockinvestor      ( Date: 25-Aug-2023 16:44) Posted: Base on the caveats, 62 units have been sold in July and August, sales revenue is $86,477,000.  Taking a simple 20% reveiced for deferred payment, that' s at least $17.3m in cash inflow from the sales so far in H2.  Traditionally about 60% of the units have attracted buyers on deferred payment.  There however seems to be an increase to 70% recently possibly due to the increase in interest rates for home loans.  Since Sing Holdings is charging 4% more for the entire unit' s price, projected revenue is now likely to hit $860m for this project assuming 50% of the remaining buyers take up deferred payment.    investshare      ( Date: 15-Aug-2023 08:14) Posted: Not progressive payment

 

Base on the caveats, 62 units have been sold in July and August, sales revenue is $86,477,000.  Taking a simple 20% reveiced for deferred payment, that' s at least $17.3m in cash inflow from the sales so far in H2.  Traditionally about 60% of the units have attracted buyers on deferred payment.  There however seems to be an increase to 70% recently possibly due to the increase in interest rates for home loans.  Since Sing Holdings is charging 4% more for the entire unit' s price, projected revenue is now likely to hit $860m for this project assuming 50% of the remaining buyers take up deferred payment.   

investshare      ( Date: 15-Aug-2023 08:14) Posted: Not progressive payment? stockinvestor      ( Date: 09-Aug-2023 14:10) Posted: > $73m of sales has been made for North Gaia between 1 July and 8 August alone.  Even if we conservatively assume that all the buyers chose deferred payment (which is not the case) and will only place a 20% deposit, that cash inflow alone is $14.6m.  We can look forward to more such positive cash inflow as North Gaia continues to be sold in H2 2023.

 

Indeed.  The estimated cost of the loan is 4.47% p.a. and the estimated interest income from the cash hoard is 3.72% so the cost is only 0.75% to keep options open. 

TAN888      ( Date: 14-Aug-2023 23:47) Posted: As long as they follow housing developer project account rules, likely it is to prepare for investment purposes. There is a good window of opportunities ahead. stockinvestor      ( Date: 09-Aug-2023 13:44) Posted: There could be a requirement for ECs to keep a certain amount of cash rather than use it to pay down the debt?  I' m not sure

 

I was just being conservative as I do not know how many took up deferred and how many took up progressive from july to august.  If all chose deferred, the cash inflow would be $14.6m, for those units sold on normal progressive (which would apply for all units bought under normal progressive scheme, not just from July to August), that would certainly mean even more cash inflow.

investshare      ( Date: 15-Aug-2023 08:14) Posted: Not progressive payment? stockinvestor      ( Date: 09-Aug-2023 14:10) Posted: > $73m of sales has been made for North Gaia between 1 July and 8 August alone.  Even if we conservatively assume that all the buyers chose deferred payment (which is not the case) and will only place a 20% deposit, that cash inflow alone is $14.6m.  We can look forward to more such positive cash inflow as North Gaia continues to be sold in H2 2023.

 

Not progressive payment?

stockinvestor      ( Date: 09-Aug-2023 14:10) Posted: > $73m of sales has been made for North Gaia between 1 July and 8 August alone.  Even if we conservatively assume that all the buyers chose deferred payment (which is not the case) and will only place a 20% deposit, that cash inflow alone is $14.6m.  We can look forward to more such positive cash inflow as North Gaia continues to be sold in H2 2023.

 

As long as they follow housing developer project account rules, likely it is to prepare for investment purposes.

There is a good window of opportunities ahead.

stockinvestor      ( Date: 09-Aug-2023 13:44) Posted: There could be a requirement for ECs to keep a certain amount of cash rather than use it to pay down the debt?  I' m not sure. TAN888      ( Date: 09-Aug-2023 06:26) Posted: By keeping the monies there would either prepare them for any purchase of land - a mid sized EC plot 300units or hotels. However if they are unable to find one in accordance to their risk appetite, then paying down further might be one of the avenues. Being a development listco and with the need to replenish land bank, some purchase would be needed to continue growing the company, especially with NG selling 5x% and going to 60-70% range.

 

> $73m of sales has been made for North Gaia between 1 July and 8 August alone.  Even if we conservatively assume that all the buyers chose deferred payment (which is not the case) and will only place a 20% deposit, that cash inflow alone is $14.6m.  We can look forward to more such positive cash inflow as North Gaia continues to be sold in H2 2023.

 

The estimated cost of the loan is 4.47% p.a. and the estimated interest income from the cash hoard is 3.72% so I guess the cost is minimal compared to the options it provides at this time.  Sing Holdings is already in a luxurious financial position compared to other companies whom you can see profit warning left right centre citing higher interest expenses.   

sgmystique      ( Date: 08-Aug-2023 18:38) Posted: The 294m loan remains intact. No paring down in 1H23 results... stockinvestor      ( Date: 24-Jul-2023 16:01) Posted: Oh and that $294m loan should be pared down by at least $100m this year.  We will be able to get more clues from the upcoming results announcement which traditionally is in early August

 

There could be a requirement for ECs to keep a certain amount of cash rather than use it to pay down the debt?  I' m not sure.

TAN888      ( Date: 09-Aug-2023 06:26) Posted: By keeping the monies there would either prepare them for any purchase of land - a mid sized EC plot 300units or hotels. However if they are unable to find one in accordance to their risk appetite, then paying down further might be one of the avenues. Being a development listco and with the need to replenish land bank, some purchase would be needed to continue growing the company, especially with NG selling 5x% and going to 60-70% range. sgmystique      ( Date: 08-Aug-2023 18:38) Posted: The 294m loan remains intact. No paring down in 1H23 results..

 

By keeping the monies there would either prepare them for any purchase of land - a mid sized EC plot 300units or hotels.

However if they are unable to find one in accordance to their risk appetite, then paying down further might be one of the avenues.

Being a development listco and with the need to replenish land bank, some purchase would be needed to continue growing the company, especially with NG selling 5x% and going to 60-70% range.

sgmystique      ( Date: 08-Aug-2023 18:38) Posted: The 294m loan remains intact. No paring down in 1H23 results... stockinvestor      ( Date: 24-Jul-2023 16:01) Posted: Oh and that $294m loan should be pared down by at least $100m this year.  We will be able to get more clues from the upcoming results announcement which traditionally is in early August

 

The 294m loan remains intact. No paring down in 1H23 results...

stockinvestor      ( Date: 24-Jul-2023 16:01) Posted: Oh and that $294m loan should be pared down by at least $100m this year.  We will be able to get more clues from the upcoming results announcement which traditionally is in early August. stockinvestor      ( Date: 24-Jul-2023 15:58) Posted: Its being treated as just another property stock and punished due to higher interest rates.  however, the dynamics of the company is a bit different from the others.  The freehold Australian hotel and the freehold 27 units of Biztech centre have no debt at all and the $294m debt taken up for North Gaia which has a development sales value of $841m (or more if more buyers take up deferred payment) is also below the industry average (except for bukit sembawang) for debt taken up for a property development project

 

A further 16 units were sold last week to bring North Gaia to almost 52% sold.

stockinvestor      ( Date: 31-Jul-2023 09:26) Posted: Sales momentum was maintained at North Gaia with a further 12 units sold last week.  22 units sold in past 2 weeks vs previous high of 18 units sold in a month.

 

Sales momentum was maintained at North Gaia with a further 12 units sold last week.  22 units sold in past 2 weeks vs previous high of 18 units sold in a month.

 

10 caveats lodged for North Gaia last week and already 9 units sold from Monday to 1pm today so far this week ahead of this weekend.

 

No excitement till next year get dividend.

 

Compared to yesterday with leftover sellers of 40,000+ shares at $0.34 but no takers, there were 105,100 shares on queue to buy at $0.34 for much of the day with no sellers matching them.  55,700 shares were transacted at $0.345 instead.