08-03-2014, 07:14 PM
(There was a slight numerical error in my previous post, so i made some corrections and reposted)
I have ShengSiong in my watchlist but have problems justifying its valuation.
At price of 60c => P/E >20 and P/S ard 1.2. This seems rich compared to other comparables.
Let's assume earnings is a function of gross floor area
Data shows:
2011 340k sqf with EPS = 1.97c
2012 400k sqf with EPS = 3c
Since the announcement of a shift of plan to purchase i/o lease, there were 2 acq plans of which Kallang was aborted subsequently.
Kallang Bahru 779sqm (ard 8.3k sqf) for 13.5mio => cost psf = $1626
Yishun 1729 sqm (ard 18.5k sqf) for 54.9mio => cost psf = $2967
so let's average it out and call it $2k psf. (this is obviously bit rubbish since locations and tenures vary)
To expand at the rate from 2011 to 2012 annually will require 60k sqf, and let's assume that 25% of this is thru purchase with the rest thru leasing (which the firm has said is tough)
That means an outlay of 0.25*60k*2k= 30mio p.a.
The latest annual profit is ard 40mio and the firm has 100mio cash.
So the analysis above is rather crude since there are so many factors to permutate, but I think there's a rough feel of what it means capital-wise by expanding thru acquisition.
I have ShengSiong in my watchlist but have problems justifying its valuation.
At price of 60c => P/E >20 and P/S ard 1.2. This seems rich compared to other comparables.
Let's assume earnings is a function of gross floor area
Data shows:
2011 340k sqf with EPS = 1.97c
2012 400k sqf with EPS = 3c
Since the announcement of a shift of plan to purchase i/o lease, there were 2 acq plans of which Kallang was aborted subsequently.
Kallang Bahru 779sqm (ard 8.3k sqf) for 13.5mio => cost psf = $1626
Yishun 1729 sqm (ard 18.5k sqf) for 54.9mio => cost psf = $2967
so let's average it out and call it $2k psf. (this is obviously bit rubbish since locations and tenures vary)
To expand at the rate from 2011 to 2012 annually will require 60k sqf, and let's assume that 25% of this is thru purchase with the rest thru leasing (which the firm has said is tough)
That means an outlay of 0.25*60k*2k= 30mio p.a.
The latest annual profit is ard 40mio and the firm has 100mio cash.
So the analysis above is rather crude since there are so many factors to permutate, but I think there's a rough feel of what it means capital-wise by expanding thru acquisition.