TUAN Sing must surely rank as one of the most under-appreciated property plays on the Singapore bourse.
The shares of this mainboard-listed company has given up a third of its value in the last two months, no thanks to the sub-prime-induced market jitters. It closed at 32 cents yesterday, way below its July high of around 42 cents.
For the first half ended June 30, 2007, Tuan Sing reported a more than fivefold jump in net profit to $48 million, from $9.2 million for the previous corresponding period.
Much of this was due to the partial sales of its District 10 Botanika freehold residential project. A substantial portion also came from the A$130 million (S$198.9 million) revaluation surplus on its Australia-based Grand Hotel Group. It has also started equity accounting for its very profitable hotel/hospitality division, having raised its stakeholding in it from 25 per cent to 50 per cent this year.
Redevelopment potential
Meanwhile its retail business, built around the PanWest golf chain, and its industrial services division were also profitable during the first half.
But what is really interesting about Tuan Sing - and which the market has barely noticed - is its portfolio of prime commercial properties right in the heart of Singapore's financial district which lend themselves to redevelopment.
The cluster of three properties comprises the ageing 13-storey Robinson Towers on Robinson Road, its adjacent Annex building, and the 13-storey International Factors Buildings which sits on the Maxwell Street side.
Together, this 'island' of three properties, sandwiched between Robinson Road and Maxwell Street, have a total built up plot ratio of 10 times, comprising a total floor area of some 12,500 sq m, or some 134,000 sq ft.
Tuan Sing's valuation of these properties, done last year, was $154 million.
That was way before the recent property market surge - both commercial property prices and rentals in the CBD have risen significantly since then.
Even erring on the conservative side, this cluster of Tuan Sing's properties could be worth well over $300 million in current market conditions. And that doesn't take into account a potential redevelopment of these properties.
Under the current URA masterplan, the plot ratio of these properties can be raised by 40 per cent if redeveloped. This works out to a potential gross floor area of some 187,000 sq ft.
And one doesn't need to be a rocket scientist to crunch the potential numbers.
New properties in the vicinity are fetching prices upwards of $2,000 psf. Recently, Hong Leong sold its No 1 Finlayson Green building at an average price of $2,680 psf.
More recently, Macquarie Global Property Advisers (MGPA) put in a record S$2.02 billion bid - which works out to $1,409 psf of potential gross floor area - for the Marina View plot. Property market insiders reckon that units in a 40-storey building erected on this plot could fetch upwards of $2,500 psf.
If these are the benchmarks, a redeveloped cluster comprising Robinson Towers, its Annex and International Factors building would be worth a staggering $500 million or more.
Spread over Tuan Sing's 1,137 million shares, the number works out to a whopping 44 cents per share - and this is not counting its other property assets.
Stock re-rating?
Whichever way one looks at it, the potential numbers are quite staggering for a company which has been keeping a very, very low profile recently.
While Tuan Sing officials have not said much, the company has nevertheless started moving towards revaluing the assets in question.
And being fully aware that the current property boom will not go on indefinitely, the odds are that the Liem Family which controls Tuan Sing will, sooner rather than later, decide to redevelop its valuable Robinson Towers and adjacent properties.
There are already rumours that it has already been approached by several potential partners who want to participate in this redevelopment. Amongst the names bandied about are the Riady-controlled Lippo group and mainboard-listed UOL.
For now, all this is just market talk.
But when the inevitable happens, this mainboard-listed player will emerge from its current slumber. Needless to add, this will force a serious re-rating of the stock.
Originally Posted by Localite
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Shanghai A-share might be in for a huge correction to 2600-2800 soon
