10-01-2011, 11:02 AM
(10-01-2011, 10:46 AM)ichiran Wrote: Posting a reply from Kevin Scully to my question on "Why would replenishing landbank unlock discount to NAV ?"
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Without its recent Robin Court puchase Sing Holdings would be mainly a cash company when the revenue from the sale of the Laurels and its other projects come in. There is no premium for listed company with just cash. But when its starts to replenish its landbank with good (well priced land purchases), this will generate a future stream of profit and increase its RNAV even further. Here investors would be looking at the profit margin from the new landbank benchmarked against previous landbank purchases to confirm the management's ability in identifying good sites.
Kevin on 7 January 2011 08:20 AM
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Kevin's point is valid. There will be no premium for a company with cash only. Actually most time, it is negative unless there is a credit crunch again and companies with debt get punished. It requires profitable operation to have PE or multiples of NAV.