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19-07-2017, 03:10 PM
(This post was last modified: 19-07-2017, 03:12 PM by Squirrel.
Edit Reason: corrected to include only related trans
)
(30-05-2017, 10:29 AM)Squirrel Wrote: Trying to look deeper into the valuation for the Shanghai Plant and hoping valuebuddies here can help with taking a look and give their thoughts. Here are the points related to the Shanghai Plant
- 47,035 sqm of gross floor area
- plot ratio unknown
- 32 more years of lease expiring in 2049
- Has undergone at least 3 phases of construction
- Phase 1: 11,293.67 sqm
- Phase 2: 8,647 sqm
- Phase 3: floor area disclosed in the financials, for warehousing purposes
- valuation cert in the YHI prospectus has the buildings valued at $4,607,000 (Phase 1 + 2) as of Dec 2002
Then comes the part in the attempt to determine the value of the plant. In the 2016 AR, its stated that the YHIMS is holding the Shanghai plant at $20,700,000 out of which $11,600,000 is the value of the land and buildings. With a straight line depreciation on the buildings, the value can be estimated to be the following breakdown.
Land: $8.65m
Buildings: $2.95m
This is potentially undervaluing the building as Phase 3 is not included in the estimated building value.
As extracted from the Shanghai property transactions site for transactions in Xinzhuang Industrial. These are properties sold by the Shanghai Municipal Planning and Land Resources Administration (name of the dept as translated by Google Translate)
http://www.shtdsc.com/2016/tdjy/jyjg/crjg/[url=http://www.shtdsc.com/2016/tdjy/jyjg/crjg/][/url]
Land Area (m2) Planned Built up(m2) Plot Ratio Price (RMB) Per m2 Lease per m2 per Yr Transaction date
Plot 239 4,746.40 8,401.13 1.77 ¥7,150,000 ¥851 20 ¥42.55 11-May-17
Plot 240 29,287.30 46,859.68 1.6 ¥35,610,000 ¥760 20 ¥38.00 28-Dec-16
Plot 235 7,289.00 14,578.00 2 ¥10,250,000 ¥703 20 ¥35.16 19-Dec-16
Plot 211 6,919.70 12,386.26 1.79 ¥9,150,000 ¥739 20 ¥36.94 01-Nov-16
Plot 223 10,747.50 21,172.58 1.97 ¥12,340,000 ¥583 20 ¥29.14 02-Dec-15
Plot 232 4,700.10 8,413.18 1.79 ¥5,080,000 ¥604 20 ¥30.19 12-Nov-15
Plot 224 19,577.00 23,492.40 1.2 ¥25,120,000 ¥1,069 50 ¥21.39 18-Dec-14
Plot 217 14,112.00 17,075.52 1.21 ¥18,000,000 ¥1,054 50 ¥21.08 18-Dec-14
Plot 225 10,131.00 26,239.29 2.59 ¥16,830,000 ¥641 50 ¥12.83 18-Dec-14
Plot 222 20,676.00 27,499.08 1.33 ¥26,370,000 ¥959 50 ¥19.18 18-Dec-14
Plot 226 20,785.00 41,362.15 1.99 ¥29,310,000 ¥709 50 ¥14.17 18-Dec-14
Plot 227 9,246.00 18,307.08 1.98 ¥13,040,000 ¥712 50 ¥14.25 18-Dec-14
Plot 214 10,132.00 26,343.20 2.6 ¥16,720,000 ¥635 50 ¥12.69 18-Dec-14
As you can see, the more recent plots post 2014 have shorter leases of 20 years compared to earlier ones.
- Mean and median plot ratio of the above is at circa 1.8
- Average per sqm per year of lease is at RMB38.16 for the last 4 transactions (2016 - 2017)
Assumptions under valuing the Shanghai Plant (Land only)
- Taking a conservative plot ratio of 1.5 (planned built up area of 70,522.5 sqm)
- Average transacted price of 38.16 per sqm per year of lease
- Remaining lease of 32 years
- SGDCNY rate of 4.951
The Shanghai plant will be valued at $17.4m, which is roughly $8.75m markup from book value. Not really meaningful if the management thinks that there is more upside and not intending to sell it yet. However it will lend some base to the rental income analysis that is coming up next.
Anything that i have overlooked here? Appreciate any inputs from the forum buddies
Just an update of more transactions during this period of time in the Xinzhuang area. Seems like management view of further upside in the property might be right.
Land Area (m2) Planned Built up(m2) Plot Ratio Price (RMB) Per m2 Lease per m2 per Yr Transaction date
Plot 250 7,297.60 14,595.20 2 ¥15,400,000 ¥1,055 20 ¥52.76 03-Jul-17
As usual, please do your own due diligence.