Lee Kim Tah

Lee Kim Tah

Postby winston » Tue Nov 11, 2008 6:36 pm

LKT's Q3 net profit tumbles on fair value losses
By KALPANA RASHIWALA

Lee Kim Tah Holdings' third quarter net profit fell to S$564,000 from S$4.7 million in the same year-ago period.

The group's bottomline was affected by fair value losses of $704,000 for investment properties in the latest Q3 period ended September 30, 2008.

The amount relates to the group's half-share in Jurong Point Shopping Centre. In Q3 2008, the increase in asset enhancement cost on investment properties and low market sentiment towards real estate attributed to the fair value loss, Lee Kim Tah said.

However, for the first nine months of this year, the group reported a fair value gain of S$3.66 million on Jurong Point, although this was still lower than the S$7.9 million fair value gain in the same period last year.

Lee Kim Tah's net earnings for the first nine months of this year slipped to $5.6 million from $16.65 million in the same period last year.
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Re: Lee Kim Tah

Postby ucypmas » Tue Jan 06, 2009 9:45 am

Anyone tracking this counter?

Crown jewel is their overall 40% stake in the expanded Jurong Point. The entire complex would be worth well in excess of SGD 1 bil if sold off to a REIT/property group. While a deal is probably some time away, the place is up and running and is generating good cash flow and it is still the better mall in the west by far.

Comparing with FCT's Causeway Point (418,543 sqft and 710mil) and Capitaland's Tampines Mall (323,487 sqft and 720mil valuation), using the average Jurong Point's valuation is about SGD 1.4-1.5 bil.

Shares outstanding: 505 mil
Total LT Liabilities: 300 mil
Value of Jurong Point stake: 420mil (+30% haircut off the total face value)

This does not take into account the value of their other assets. They have one hotel in Australia and another in China, some property developments overseas and a bit of a landbank in India.

If they don't liquidate JP, I have roughly estimated the property to be worth a cashflow of 34-40 mil to Lee KT (net mgt expenses before debt service costs). Assumed a rental of 12.5-15 psf/mts x 750,000 sf x 12mths x 75% (net mgt/prop expenses) x 40% share = 34-40 mil p.a.

Downside:

They closed at 0.42 yesterday making the market cap about 210 mil. Relatively undervalued I would say, but not a steal. If it got to < 0.35 it would be a deep value play, possibly for a number of years waiting for them to unlock JP.

Insiders have been buying whatever shares that came onto the market, especially during the forced liquidation of the past few months. Lack of liquidity is a concern (?), especially with 91% of the outstanding shares already held by the top 20 investors.

Appreciate if anyone have any experience looking through their financials to comment on their debt structure. They have refinancing of the SPV due in Oct2009 with regards to the loans they took out to finance the Jurong Point expansion.
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Re: Lee Kim Tah

Postby ucypmas » Tue Jan 06, 2009 11:13 am

Realised that I forgot to say - not vested in this counter.
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Re: Lee Kim Tah

Postby LenaHuat » Thu Jan 08, 2009 9:10 am

I was reading dydx's write-up on Jurong Point and agree very much with his assessment. In fact, a short while ago I 'ventured' to this far end of our isle to see for myself this lately 'much-talked abt' mall and went away with very good impression of its potential. If JP is the cashcow, I don't see why it would be 'unlocked' into a Reit or sold.
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Re: Lee Kim Tah

Postby ucypmas » Thu Jan 08, 2009 8:53 pm

Value can emerge through a number of ways. The cash flow going into Lee KT can come out either through increased book value or higher dividend yields. Provided that the management do not squander it... always the unknown. And this is a Chinese company so I'm not sure if they will fall to the usual family company disease of being run to the ground a couple of years after the older generation passes on...
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