Following a week of strong share price performance of FCL that started from the acquisition of Sydney Sofitel Wentworth, EGM notice for FHT and a feature in The Edge Magazine, I understand that there is a new coverage by a foreign house with a target price of $2.28.
FCL is edging closer to its reported book value of $2.17. As indicated in my previous posts, FCL has done all that it could in its short listing history as a relisted company to "rebuild" a track record that is previously hidden under F&N.
While it is convenient to forget or ignore FCL's contribution to F&N's former conglomerate history, there is no doubt that FCL has came a long way as a sizable Singapore based property company with global exposure.
With record share price, the main question on many minds would be - will any institutions in the right frame of mind buy when Thai Towkay is ready to dilute his tight holdings?
I am quite confident that TCC and all the team members have thought through the same question since they have their tasks cut down to convince potential institutional investors to buy from them at their price - a price that will not come cheap but certainly fair to those that will be parting a well run and tight ship.
FCL has no GLC linked pedigree but certainly the key personnels that have been at the helm has been focusing on delivering ROE and ROA as they lack historical landbank or assets to begin with. As F&N were previously ran by a professional board, the rigidity of making strategic business decisions at FCL is likely to be similar to that of F&N.
However, strict professionalism has also resulted in financial discipline that TCC has inherited:
i) focus turnaround of development projects in high landbank cost countries such as Singapore and UK to mitigate for the lack of landbank;
ii) focus country based outlook such as their shrewd reading of China property market that help lessen their exposure and their overweighted exposure in Australian market where property market is doing well especially in Sydney. I dislike to make comparisons but relative to Capitaland, FCL appears to be making decisions that have been well ahead and in tune with current market affairs;
iii) a complete suite of REIT platform for systematic enhancement of capital employed over time that will not devoid core earnings at parent levels while pursuing asset light strategies.
While many may argued that the lack of free float may have contributed to FCL price rising in a vacuum, early analysts from DBS, CIMB and now the rumoured foreign brokerage have all highlighted that FCL is a sizable multi-platform property company that institutions must eventually own - how not to own since its total market cap has already exceeded that of Kep Land and UOL in addition to the potential disappearance of CMA due to a possible delisting.
Post F&N, the sequential drama serial has been staged on FCL. Thai superman has his going smooth so far and who will argue that Mr Market is wrong in latest drama serial?
We just have to sit tight in our couches and not to be disturbed by noise and intermittent advertisements.
Vested
GG
(16-05-2014, 09:41 AM)greengiraffe Wrote: [ -> ]FCL has been featured in this week's Edge. The following is the summary:
Development Prop:
Singapore - looking to further shortened turnaround time for launch of sites secured. Aiming to rightly priced new launches than to make buyers of earlier phases feel betrayed by lowering prices if response is not good. Land costs in Singapore averages 60 - 80% of total development costs, hence turnaround time is crucial than landbanking which is an expensive and risky strategy. FCL has reduced the time from securing land to launch from 12 months to 8 months and is aiming to further reduce to 6 months. Remaining unlaunched site is North Point site but need to get temporary bus terminal up before any launch can proceed. Expected launch price - $1100/1200psf (quite a challenge IMO)
China - waiting for shoe to drop and FCL is well positioned given that they have reduced their exposure over last few years. China developments required clearances from various levels of government.
Australia - still good and main obstacles for development are not from government authorities but from green groups and neighbourhood concerns (aka human rights issue)
UK - focusing away from Central London and looking at south of River Thames and outskirts of London. Cited a pre-selling of entire block @ Vauxhall before development commenced.
REITs and pipeline:
FCT - after Changi City Point, they are aiming to develop North Point 3 (600000sf net lettable) that will eventually be injected to FCT
FCOT - Alexandra Point might be injected to FCOT while grade A office building @ Cecil Street also meant for FCOT in the future.
FHT - mgt feels that 22% holdings of FHT post listing sufficient as FCL controls 100% of the REIT manager.
Others - Centrepoint redevelopment not imminent as aiming to redevelop with Starhub Centre but unable to get enbloc at 44 units of Centrepoint Residence going.
Analysts viewed eventual placement by TCC/Inter-Bev post 9 Jul 14 positively.
For all the details, grab your Edge this week.
Vested
GG