04-03-2015, 04:07 PM
Hi boon, good points and thanks for the flashing of the numbers.
I am aware that Amara has contribution from investment properties and so it is not a pure play. Also aware that there are fair value gain. I am not that much bothered by it because other hotel stocks have investment properties as well. I think pure plays hotel stock are very rare. Now presumably, one can make adjustments to all the hotel stocks to get the cleanest comparison but it will 1) take lots of effort 2) doing so will give rise to problems of its own. And does it matter that much? the fact is that the market assigns much higher multiples to other hotel stocks which have property/investment segments as well.
The fair value gain is interesting. The bulk of it if im not wrong comes from 100 Am. While it is a one off gain accounting wise, but it has in effect been occurring every year consistently. The question is is this fair value gain in reality a recurring one? And for it to be recurring two conditions have to be fulfilled. 1) asset is carried conservatively on the book 2) higher rentals/ sustained good market conditions such that valuation will increase organically. And if 1 exists to a large extent, then 2 may not be that important. A case in point will be Guthrie and Lee Kim Tah. Because of both 1 and 2, it has revalued its ownership of jurong point upwards for the past 5-6 years. Such fair value gains I dont think should be discounted completely because they form a tangible and substantive part of the value of the company. My own back of the envelope calculation suggests that 100 am is carried conservatively. But will be interesting if we can take it further on this point.
Completely agree with you on the operating/ cash flow perspective. In fact that's a very nuanced point. And so that's why i view this as a cigar butt, supercharged with growth in value in the near term. looking at pe/rnav, rather then buffet's wonderful companies that compound, looking at ocf,fcf.
I have done some conservative(i hope) calculations for the valuation for amara shanghai and bangkok. for hotel components i have used revpar for 4/5 star hotels in their respective cities, number of rooms, 35% profit margin and comparative cap rates. for office and retail components i have used rental * nla *50% profit margin and compartive cap rates. The conclusion was that significant chunks of value will be added to Amara. In terms of earnings and asset value. Will be interesting if other value buddies can comment on their own methodology and perhaps even calculations.
I am aware that Amara has contribution from investment properties and so it is not a pure play. Also aware that there are fair value gain. I am not that much bothered by it because other hotel stocks have investment properties as well. I think pure plays hotel stock are very rare. Now presumably, one can make adjustments to all the hotel stocks to get the cleanest comparison but it will 1) take lots of effort 2) doing so will give rise to problems of its own. And does it matter that much? the fact is that the market assigns much higher multiples to other hotel stocks which have property/investment segments as well.
The fair value gain is interesting. The bulk of it if im not wrong comes from 100 Am. While it is a one off gain accounting wise, but it has in effect been occurring every year consistently. The question is is this fair value gain in reality a recurring one? And for it to be recurring two conditions have to be fulfilled. 1) asset is carried conservatively on the book 2) higher rentals/ sustained good market conditions such that valuation will increase organically. And if 1 exists to a large extent, then 2 may not be that important. A case in point will be Guthrie and Lee Kim Tah. Because of both 1 and 2, it has revalued its ownership of jurong point upwards for the past 5-6 years. Such fair value gains I dont think should be discounted completely because they form a tangible and substantive part of the value of the company. My own back of the envelope calculation suggests that 100 am is carried conservatively. But will be interesting if we can take it further on this point.
Completely agree with you on the operating/ cash flow perspective. In fact that's a very nuanced point. And so that's why i view this as a cigar butt, supercharged with growth in value in the near term. looking at pe/rnav, rather then buffet's wonderful companies that compound, looking at ocf,fcf.
I have done some conservative(i hope) calculations for the valuation for amara shanghai and bangkok. for hotel components i have used revpar for 4/5 star hotels in their respective cities, number of rooms, 35% profit margin and comparative cap rates. for office and retail components i have used rental * nla *50% profit margin and compartive cap rates. The conclusion was that significant chunks of value will be added to Amara. In terms of earnings and asset value. Will be interesting if other value buddies can comment on their own methodology and perhaps even calculations.