(10-04-2013, 07:09 AM)FatBoi Wrote: [ -> ]Hi ppl, there has been significant chat so far on the orderbooks, the latest moves for LKH. Any views on the level of gearing? from the latest results, interest bearing liabilities exceed shareholders' equity, is this sustainable given the current low interest environment? thanks.
Construction/Property companies normally have high amount of liabilities due to their nature of business. Most of the liabilities of LKH will disappear when the properties' TOP or completion of construction.
Of course, if all the Minton's and Paya Lebar square's unit buyers decided to give up their units and forsake all the payment that they have committed so far, LKH will be left with a huge liability and unsold units.
You can weigh the probability of that happening and decide the fate of the company.
(10-04-2013, 08:30 AM)yeokiwi Wrote: [ -> ] (10-04-2013, 07:09 AM)FatBoi Wrote: [ -> ]Hi ppl, there has been significant chat so far on the orderbooks, the latest moves for LKH. Any views on the level of gearing? from the latest results, interest bearing liabilities exceed shareholders' equity, is this sustainable given the current low interest environment? thanks.
Construction/Property companies normally have high amount of liabilities due to their nature of business. Most of the liabilities of LKH will disappear when the properties' TOP or completion of construction.
Of course, if all the Minton's and Paya Lebar square's unit buyers decided to give up their units and forsake all the payment that they have committed so far, LKH will be left with a huge liability and unsold units.
You can weigh the probability of that happening and decide the fate of the company.
The probability is slim. Even if it occurs, Paya Lebar Square with its location will not have an issue finding new buyers or tenants.
(Vested)
A question to experts on property development industry.
In the foreseeable future, perhaps in a time frame of 3-5 years or less, the property market is going to take a down turn, especially when interest rates goes up. Everyone knows that property price is cyclical.
How would property developers like LKH adapt to changes like that?
And should investors with a long term perspective (>10 years) stay vested in property development companies like LKH?
LKH is the best position to cash in on your dooms day scenario. If everything goes well (complete PL Sq and Parkland and collect sales proceeds) and they are sway enough not to get anything before the prop mkt crashes, then LKH can pick and choose anything from the trash.
LKH like what a friend said is already cashed up for such a scenario and we are only hoping that mkt cool off for recycling or LKH may just decide to replicate what their M'sia parent did - delisting, sit back and retire.
Vested
GG
(15-04-2013, 11:41 PM)Wildreamz Wrote: [ -> ]A question to experts on property development industry.
In the foreseeable future, perhaps in a time frame of 3-5 years or less, the property market is going to take a down turn, especially when interest rates goes up. Everyone knows that property price is cyclical.
How would property developers like LKH adapt to changes like that?
And should investors with a long term perspective (>10 years) stay vested in property development companies like LKH?
(15-04-2013, 11:55 PM)greengiraffe Wrote: [ -> ]If everything goes well (complete PL Sq and Parkland and collect sales proceeds) and they are sway enough not to get anything before the prop mkt crashes, then LKH can pick and choose anything from the trash.
Thank you for your analysis, but this is the part I do not understand.
What do you mean by "pick and choose anything from the trash"?
(17-04-2013, 12:13 AM)Wildreamz Wrote: [ -> ] (15-04-2013, 11:55 PM)greengiraffe Wrote: [ -> ]If everything goes well (complete PL Sq and Parkland and collect sales proceeds) and they are sway enough not to get anything before the prop mkt crashes, then LKH can pick and choose anything from the trash.
Thank you for your analysis, but this is the part I do not understand.
What do you mean by "pick and choose anything from the trash"?
If physical prop mkt indeed collapsed like what many are hoping for, don't you agree that LKH can pick and choose anything from the trash?
(17-04-2013, 06:07 AM)greengiraffe Wrote: [ -> ]If physical prop mkt indeed collapsed like what many are hoping for, don't you agree that LKH can pick and choose anything from the trash?
You mean acquire projects, land, properties etc. at depressed price?
I am worried for their net income and profit margin, especially on their existing project. A correction in the property market will affect both demand and their bottom line, even at depressed price. I hope LKH does take such scenario into consideration (maybe should raise this to them at the next AGM), given the high probability of it happening.
Another cause of concern will be the tightening of foreign labour policy. Construction is traditionally a foreign labour intensive enterprise.
On the plus side, given that LKH has many projects in Malaysia as well, the impact may not be as severe.
(vested)
In this market, it is fortunate that LKH is diversified with projects in Malaysia.
(Vested)
(17-04-2013, 11:30 AM)Wildreamz Wrote: [ -> ]I am worried for their net income and profit margin, especially on their existing project.
I think this is an unnecessary worry.. This may be true for some other future projects though
Bearish Signals
Downtrend
- The stock dropped to a 21-day low.
Overbought/Bearish/Resistance Signals
- The Money Flow Index [MFI] is 88.4 suggesting an overbought 14-day trend, being above 80. The Money Ratio of 7.6 suggests positive money flow was 7.6 times negative money flow.
Fundamental measures by comparison with the sector average [in brackets] indicate Overvaluation:
- Price/Sales of 3.1 [0.6].
- Price to Book of 1.3 [1.1].
Other Bearish Signals:
- Total Liabilities/ EBITDA of 6.9 is more than or equal to 5, this compares unfavourably with the Joseph Piotroski benchmark of 5.
Description
Value
Rank In Market
Price to Sales
3.1
In Bottom Quartile
Price Change %
-1.4
In Bottom Quartile
%Prem To Vol Wtd Price
0.5
In Bottom Quartile
EPS Growth %
9.1
In Bottom Quartile
Total Debt to Equity
1.4
In Bottom 7%