Thursday, August 11, 2016

Sing Holdings Limited - Property Developer That Pass Enhanced Triple S Scorecard

This is really an interesting stock. I shall not be "naggy" and start straight away.

Profile in Short
Founded in 1964, Sing Holdings Limited and its subsidiaries (the “Group”) is a property development and investment group listed on the Mainboard of the Singapore Exchange.

Some of the Group’s recent developments include residential projects such as BelleRive in Bukit Timah area, The Laurels at Cairnhill, Waterwoods in Punggol and Robin Residences at Robin Drive.

The Group also developed industrial and commercial buildings such as BizTech Centre along Aljunied Road, EastGate in the East Coast area and Ocean Towers, an award-winning Grade-A office building in Shanghai, the People’s Republic of China.

The Group will continue to focus on its core business of property development and investment. It endeavours to deliver dream homes to its homebuyers, in its bid to realise its vision of becoming A Developer of Premier Living.

Based on Enhanced Triple S Scorecard (Present Price of $0.295):


 Why So Good?

No Debt - This is another amazing property developer that do not hold any debts. This also meant that the company has the ability to use leverage to buy land bank or build property.

Passed Enhanced Triple S Scorecard - At last I found a property developer that passed the Enhanced Triple S Scorecard!

Future Revenue - There are currently 3 developments that Sing Holdings are working now.
  1. The EC development, Waterwoods, is a 70:30 joint venture. As of 6 May 2016, approximately 98% of the units have been issued an option to purchase. The project obtained TOP in December 2015. Revenue of about 95% of all sold units have been recorded.  
  2. Sing Holdings Ltd’s other development property, Robin Residences is a 100%-owned private condominium development. As of 6 May 2016, approximately 69% of the units have been issued an option to purchase. Revenue was recognised progressively based on the stage of construction. The project obtained TOP in December 2015.  Thereafter, revenue was recognised fully upon execution of sale and purchase agreement. 
  3. The 3rd development is BizTech Centre, a freehold property. The company currently owns 48 strata units with a saleable area of 50,227 square feet in the industrial building. Of this, approximately 92% has been tenanted. 
Although development 1 has almost recorded all its revenue, but there are still about 30% of the units in development 2 that has yet to be sold and recorded. In my opinion, Cost of goods of these development should have already been recorded. Thus, any future revenue that is recorded will be at almost no cost.

Furthermore, if we based on a rental of $2 psf per month for the 3rd development, Sing Holdings Ltd will added about $1.2 M of rental income per year at almost no cost. Do note that this is a freehold property and the company can keep earning this "free" revenue for a long time.

Future "Cash and Cash Equivalent" -
Based on the Current Asset listing, Trade Receivables and Development Properties are the top 2 contributors. However, if you understand their business model (shown below), you will be able to see that the company will add at least another $200 Million of Cash and Cash Equivalent over the next few quarters.

Development Properties sold to Buyer > Buyer get bank loan to pay for the mortgage > Development Properties transfer to Trade Receivables > Since development has been TOP, bank will release money after the loan has been approved > Trade Receivables will then transfer to Cash and Cash Equivalent.

Thus, with so much cash, the company may give out more dividend in future!

*Do note that once a bank has approved a mortgage loan for a buyer, they will definitely release the funds accordingly to the schedule of the agreement. Even if the buyer defaults halfway or even before TOP, the bank will still continues to pay the developer. Thus, once a unit has been sold, the developer will definitely stand to gain!

Why So Bad?

No Future Plans - As stated in the latest quarterly report, it said "In the absence of new projects and with significantly lower revenue to be recognised from its existing development properties, the Group expects to report substantially lower profit, or loss, for the next few quarters." This also meant that the company do not have much plans now and the share price may go lower in future as the revenue and profit goes lower.

In Short
 
By understanding the business model, you will be able to see how the company will definitely gain in future. This will also definitely benefit the shareholders eventually (if you hold for the long term). Moreover, this is a property developer that pass the Enhanced Triple S Scorecard at its current price! What more should we bargain for?

As summarized by sgmystique in Valuebuddies:

Current Price: $0.295 as of 11 August 2016.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this stock/company at $0.300.

For those who are interested to find similar quality under-valued stock, you can come to my 2nd Sharing Session with T.U.B! I will only be sharing my Enhanced Triple S Scorecard with the attendees of the Sharing Session. If you are interested to attend the 2nd Sharing Session with T.U.B., do not hesitate to contact me directly.

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