ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

From CIMB analyst, Donald Chua on investor meeting with FCL, dated February 12, 2014. The message is directly from CFO.

------
In a series of investor meetings, CFO Mr Chia Khong Shoong reiterated FCL’s
strategy to allocate more capital to its core overseas markets, particularly
Australia (Sydney and Perth). FCL believes it needs to balance development
and recurring income and aim for more mixed developments. China is a core
overseas market, though any investments will be more measured, likely with
local partners and focused on its core cities in Suzhou and Shanghai. FCL says
it is natural for it to venture into Thailand in the longer term given TCC’s
dominant position. However, management downplayed the possibility of this
becoming a core market as the dollar value potential remains small. For now,
FCL plans to gain access to the Thailand market via asset management and
serviced apartments. In Singapore, the approach is to adopt a fast-churn model
and treat housing stock like raw materials, while it evaluates how best to
revitalise its commercial property portfolio. FCL thinks now is not the ideal
time to redevelop Centrepoint and Starhub Centre, although this remains on
the cards. FCL says having a hospitality REIT will complete its asset-light
initiative, but is in no rush to divest.
------

This is the previously talked about Brisbane IR project that was formerly named in the last few months. Stamford Plaza Brisbane is within walking distance to 1 William Street (The main site of redevelopment)

http://brisbanedevelopment.com/queens-wh...-brisbane/

Developers Lend Lease, Leighton Properties, Mirvac and Singaporean developer Frasers Property declined to comment on whether they had applied.

China titan stalks CBD project
GREG BROWN THE AUSTRALIAN FEBRUARY 13, 2014 12:00AM

AUSTRALIAN casino giants Echo Entertainment and James Packer’s Crown Resorts will face fierce competition for Queensland’s biggest urban and casino project, with Chinese behemoth Greenland Holdings Group bidding for the multi-billion-dollar Queens Wharf redevelopment in the Brisbane central business district.

Greenland has applied to the Queensland government to submit a tender, with the group in the early stages of compiling a master plan for the Queens Wharf precinct.

Greenland - a property, casino and resort developer on the Fortune Global 500 list - had global revenue last year of close to $55 billion.

Crown’s worldwide revenue in the year to June 2013 was $2.8bn, while Echo’s was $1.9bn.

The state-owned Chinese group’s master plan will likely include a casino, six-star hotel, retail space, commercial space, apartments and public space, according to sources close to the process.

The proposed development is expected to have an end value of between $3bn and $5bn.

Representatives of the company’s local subsidiary, Greenland Australia, were in Brisbane yesterday to talk to the Queensland government about the next stage of the process, sources said.

It is understood that Greenland is open to completing the project as part of a joint venture, although the group will submit its master plan alone.

Sources said that Echo Entertainment was also seeking a joint venture partner, although it was not believed that the two companies had talked at this stage.

Greenland Australia and Echo Entertainment declined to comment.

Deputy Premier and Minister for State Development, Infrastructure and Planning Jeff Seeney said: “The expressions of interest process to allocate integrated resort licences is subject to strict probity rules and as such interested parties cannot be identified.

“Additionally, not all of the proponents who have registered an interest in this process will go on to submit detailed bids, and consortia may be formed by these early applicants.”

Greenland is one of at least eight companies that have applied to take part in the tender process.

Last year the Queensland government announced that it planned to regenerate the Queens Wharf precinct - at the parliamentary end of the CBD - into a global tourist destination.

The redevelopment would cover 9ha and link major parts of the CBD.

The winning party would need to protect the heritage buildings, while also proving the area could become an iconic resort precinct.

The project is expected to attract substantial local and offshore interest.

Developers Lend Lease, Leighton Properties, Mirvac and Singaporean developer Frasers Property declined to comment on whether they had applied.

A spokeswoman for private developer Grocon said: “We don’t comment publicly on opportunities at this early stage in their process.”

There is also speculation that other foreign-based casino groups have applied.

Malaysian giant Genting Group has a 6.6 per cent stake in Echo, which owns casinos in Sydney, Brisbane and the Gold Coast, and is awaiting approval from gaming authorities in NSW and Queensland to increase that stake.

But some analysts think it could choose to go it alone in Brisbane, according to reports.

New Zealand-based SkyCity Entertainment Group is a widely speculated bidder, and it already runs casinos in Adelaide and Darwin.

Genting could not be contacted. A spokeswoman for SkyCity said: “The bid process is a confidential one so we won’t comment.”

Companies have until the end of March to submit a detailed expressions of interest, with the government to short list candidates by the middle of the year. A successful bidder will be chosen by the government early next year, with construction to begin in 2017.

Greenland’s previous casino resort development was in South Korea at a tourist destination called Jeju Island.

The push for the Queens Wharf project is part of a huge global expansion by the Shanghai-based group, which is aiming to increase total revenue this year to $66bn. Greenland entered the local market last year with $1bn worth of projects, including Sydney’s tallest residential tower and a planned mixed-use development near Melbourne’s Flemington Racecourse.

Greenland’s Shanghai-based chairman Zhang Yuliang has said the company wants to expand its offshore casino holdings as it attracts Chinese tourists.

Gambling is illegal on the Chinese mainland but is popular among wealthy Chinese.

Greenland has been active in China for 21 years. It expanded to the US, other parts of Asia and Europe three years ago.

Outdated Response:

No denial from FCL: http://infopub.sgx.com/Apps?A=COW_Corpor...v-Hi4V7T_Y

Hospitality REIT likely to have assets from FCL and TCC.

During the takeover war between Thai and Indo for F&N, OUE did table a cash offer for F&N's hospitality arm worth S$1.4bn

http://infopub.sgx.com/Apps?A=COW_Corpor....10.12.pdf

Based on my digging of filing related to takeover for F&N, I have enclosed my spreadsheet indicating the eventual takeover costs of F&N before advisory, transaction and financing costs and while it is true that Thais are now above water but the return is quite little consider the huge sum involved (enclosed spreadsheet).

Going forward, the costs to the Thai will be a combination of 1 F&N and 2 FCL. The locking in amount included distributions paid from F&N totalling $3.555 and FCL's maiden dividends of 2 X $0.0173.


d='73265' dateline='1391669132']

(04-02-2014, 09:44 PM)arriyana Wrote: [ -> ]and why do you think that defensive plays will be the next cycle? Most of them have been pushed up fairly high.

Reuters:
UPDATE 1-Thai tycoon Charoen's FCL eyes $473 mln hospitality REIT in Q2-sources

* Picks DBS, HSBC, Morgan Stanley, UOB for IPO-sources

* Marks first step toward merging of Charoen, FCL property assets

* Listing comes after F&N, FCL split last month (Adds detail on FCL properties, valuation)

By Saeed Azhar

SINGAPORE, Feb 6 (Reuters) - Frasers Centrepoint Ltd (FCL) , a company controlled by Thai billionaire Charoen Sirivadhanabhakdi, is looking to raise up to S$600 million ($473 million) through the listing of a hospitality real estate investment trust in Singapore in the second quarter, sources said.

This listing would mark the first step toward the merging of property assets of Charoen's business empire, which operates under the Singapore-listed FCL and his TCC Group, after the Thai tycoon won control of the drinks-and-property conglomerate Fraser and Neave in an $11 billion deal last year.

Charoen's fortunes appear better than rival businessman Dhanin Chearavanont, whose retail firm CP ALL has become Asia's most indebted food retailer after an expensive acquisition funded by a large foreign currency loan.

FCL's planned real estate investment trust would hold serviced residences owned by F&N and other assets such as the InterContinental Hotel in Singapore, which Charoen's TCC Group owns, sources said.

FCL, which split from Fraser and Neave into a separately listed property-focused company, has a market value of $3.2 billion, while Fraser and Neave is valued at $3.8 billion.

F&N returned S$4.73 billion to shareholders as part of a capital reduction last year.

If dividends are included, Charoen's deal to takeover F&N is profitable especially after the split, which now reflects a better market value of its Singapore property business, one of the sources told Reuters.

In a research note last month, UBS also flagged the possibility of Charoen's Thai Beverage selling its stake in the property business and taking a larger stake in F&N to focus on the food and beverage firm.

SERVICED RESIDENCES

FCL's Frasers Hospitality owns serviced residences in Singapore, Europe, North Asia, Southeast Asia, the Middle East and Australia, offering about 8,000 apartments in more than 30 cities, according to its website.

FCL has picked DBS, HSBC, Morgan Stanley and United Overseas Bank as the main advisers on the deal, sources with direct knowledge of the matter said.

These banks also played a key role the F&N transaction with DBS and UOB providing the bulk of the financing.

"The deal could come as early as April, but all depends on the markets," a source with direct knowledge of the matter said, adding the deal size could be between S$500 million and S$600 million.

A spokesman for FCL said the group has previously announced that it is exploring the possibility of a hospitality REIT, but declined to confirm the name of the advisers and the size of the deal. The banks were not immediately available to comment.
[/quote]

http://singaporeanstocksinvestor.blogspo...point.html

Tea with Solace: Frasers Centrepoint Limited (FCL)
Sunday, February 16, 2014
A Peek into Frasers Centrepoint Limited (FCL)

Frasers Cpt (FCL) has been spun off by F&N, the real estate division carved off from its operation business. It was listed on the SGX Mainboard on 9 Jan 14. The stock opened at $1.61, reaching a high of about $1.70 a couple of days later before retreating to the current price of $1.41 to $1.42.

FCL operates as an international real estate company. It owns many properties that we are very familiar with. It has major stakes in two REITs – FCT and FCOT.



Souce: FCL 1Q14 Results Presentation. Click to enlarge.

Financial Highlights

Revenue increased by about 87% and PBIT increased by about 63% Year on Year. The strong set of 1Q14 results showed year on year gains in all segments. Strong overseas development sales were the key driver.

Development PBIT rose by about 121% year on year. It was led by Australia with the completion of One Central Park (CP) and Park Lane Block 5A in Sydney. As for China, around 750 units were sold in 1Q14, but the overall residential market remains cautious in China. In Singapore, Overall prices declined 0.9% q-o-q in 4Q13. Around 15,000 new homes were sold in 2013, 32% lower compared than 2012

Given the increasingly cautious sentiment in the local property market which has been affected by cooling measures, Frasers Centrepoint’s strategy of venturing overseas can put it in a good position for further growth,

There was also an increase in commercial rents and room rates with higher contribution from One@Changi City . Construction of Waterway Point is progressing well, slated to be completed in 2015.

Currently the Net Asset Value per share is $2.15. At current price of about $1.41, it is about 35% discount to its NAV. I am vested at this price

I resisted entering when it was trading at $1.50 or $1.60. Recently, I make a comparison of similar real estate companies listed in Singapore. On average, they are trading at about 0.75x book value. At current price of $1.41, with about 35% discount to NAV, I feel comfortable vested in FCL properties. Valuation is attractive in my opinion.

FCL has a net debt to equity of about 50%, which I am uncomfortable with. Recent media reports suggest that FCL will launch a hospitality trust, which could raise S$600m. Once they spin out the hospitality REIT, they should be able to move some debt off their books. This asset recycling move is beneficial to FCL similar to what OUE and SPH have done in recent times.

This move can fund new acquisitions and allow them to be asset light. This strategy also allows them to earn more REIT management fees and improve its commercial portfolio.

Potential Risks

FCL has a small free float of only about 12%. This does not sit well with large investors. Hopefully, this will change over time. Increasing FCL free float will improve investor participation and narrow the valuation discount. This remains a uncertainty and likely to depend on market forces.

Another potential risks lies in the majority shareholder. In this case, it is Thai boss, Chaoren, holding a direct stake at 76%. It is of utmost important that the Thai towkay's interests are aligned with minority shareholders.

What are the things the management can do to the detriment of minority shareholders? They can set unreasonably high directors remunerations or, worse still, IPT (Interested Person Transaction) which will solely benefit the majority shareholder instead of all shareholders. I believe IPT risk possibility is low but still it is a risk.

As Warren Buffett said, integrity of management is very important. This is an area which I have to pay attention to.

Conclusion

I believe at current valuation, FCL is attractive, trading at about 35% discount to its book value of $2.15. The portfolio is spread across residential, commercial and hospitality properties in markets such as Singapore, China and Australia which reduces the risk of downturn in any particular country dragging down the whole company. It has a good history of increasing its profits and assets. FCL also has a potential catalyst in the form of REIT listings in the near future,

Key risks like free float and management integrity still remains. The financials of FCL look extremely attractive and there is huge potential upside to go but it also holds hidden risk that goes beyond financial statements.

While many people are proclaiming doom for the real estate, my strategy is to invest at attractive valuation and sit tight to wait for events to unfold. I like to stay invested in good counters for longer period of time. All counters are good investments at the correct valuation.

I came across a recent quote from the papers which best explains my strategy in holding this stock.

"We believe that if you don’t believe in holding a share for 10 years, then don’t even think about holding it for three days… Speculators can still get their thrills through other means. But let’s not make the mistake of confusing investing with gambling"

- Mr David Kuo, Chief executive of Motley Fool Singapore.

(10-02-2014, 09:25 PM)valueinvestor Wrote: [ -> ]

(10-02-2014, 08:31 PM)weijian Wrote: [ -> ]

(10-02-2014, 05:14 PM)cfa Wrote: [ -> ]Got mine at 1.40 today. Should be near lowest if not the lowest.

Life's a bit*h and it sure likes to give one a rude surprise at times. I wouldn't attempt to make such predictions if i were u, but it does give me a dose of dopamine, knowing that my cost price is lower than half of the people are posting in this thread!

*no pun intended*

Disclosure: I know nuts on technical analysis to determine highs/bottoms, but my gut sense tells me that fear indicates bottoms, while the no. of 'huats ah' or buying interest dictates highs. Whether VB or CNA, there is much similarities.

If I were you I wouldn't disagree with such posting. I thank him/her for the reminder.

Thks cfa for that reminder, i went on board @1.41. I could have missed that.

Fire sales over ?

Fraser Centrepoint = Centre Of Attraction = Stay Focussed

(18-02-2014, 03:19 PM)valueinvestor Wrote: [ -> ]Fire sales over ?

If you study how the riches go from poor to rich, you will notice that most of them involve a great amount of debt. The return of asset is really low in most of the assets in the world. The simple way to double your wealth in short period is to take a huge amount of debt to acquire the asset. With 80% funded by debt, the asset valuation increase 20%, you doubled your wealth already. With 20% funded by debt, the asset valuation has to increase 80%. That's difficult and takes very long time. Getting credit from financial institutions cheap is difficult. For most common people, mortgage is the only way. For anyone inspired to get rich quickly, borrow as much as possible and as cheap as possible and repay your loan as slow as possible.

Is there any reason for TCC to repay its debt early if the debt is not called? I don't see any.

(18-02-2014, 03:43 PM)freedom Wrote: [ -> ]If you study how the riches go from poor to rich, you will notice that most of them involve a great amount of debt. The return of asset is really low in most of the assets in the world. The simple way to double your wealth in short period is to take a huge amount of debt to acquire the asset. With 80% funded by debt, the asset valuation increase 20%, you doubled your wealth already. With 20% funded by debt, the asset valuation has to increase 80%. That's difficult and takes very long time. Getting credit from financial institutions cheap is difficult. For most common people, mortgage is the only way. For anyone inspired to get rich quickly, borrow as much as possible and as cheap as possible and repay your loan as slow as possible.

Is there any reason for TCC to repay its debt early if the debt is not called? I don't see any.

True. Property investment without leverage, is meaningless. But the debt must be owned by where is due.

FCL owning the debt is more appropriate, rather the holding company, IMO

I checked with the bank account, the small dividend of 1.73 cents per share is credited. Looking forward for more dividend(s) ahead, the same as its parent i.e. F&N, with direction from its Thai grandparent

(vested)