Getting Some APTT

*Apologies as this post is supposed to be out some time ago, but due to my busy schedule, I'm not able to complete the post till today*

Asian Pay TV Trust is one of the companies I'm looking on SGX in the very beginning of my investing journey and one of those I actually started doing a homework for... or rather... an analysis. 

A simple one.

I was pretty much attracted by the yield back then and I started to source out some in our local market.

I remember going through Mapletree GCC Trust at about 1.00 range (something that I pretty much regret till date), APTT at around 38-39 cents, AA REIT at 1.35 range and HPH Trust at 48 cents USD.

Just as I'm doing some homework on APTT back then, the prices started to pick up even before I've completed analyzing it to 45 cents and I decided to drop the idea of having it as I'm not intending to chase any "boats".

And yes, you're right. I've bought myself some dustbins in International Business Park at Jurong for my Valentine's day present to myself.
I got a little more curious when APTT prices scaled even higher up to 50s and 60s range in late 2017 and decided to pay a little more attention to it. To be honest, I'm pretty much disgusted by the level of debt APTT got itself in and I did punch myself a little for not acting back then.

The high level of CAPEX and FCF back then also serves as a warning for me to not enter a position with them. I felt that the risk taken for entering at that range could not be compensated by the dividends.
 
APTT had announced a dividend cut and will only be paying only 1.20 cents annually, at least for the next 2 financial year ahead when the 3rd quarter financial results are released. 

From: APTT 3Q Financial Presentation

The market reacted very strongly and punished the shareholder severely by crashing half it's valued of the next market day to 16 cents. 

How about now when it had fallen by 16-17 cents to 16-17 cents??

Is the compensation fair now? I'm not certain. But definitely, it looks much better than it is at 30, 40 and certainly 50 cents.  

For those that had paid a higher entry price to APTT, this will translates to a big pay cut and probably even a big unrealized loss we're looking at. 

How is it then to non-APTT shareholders?

With this move to cut their distribution, APTT will now have a much more sustainable payout ratio and in fact with some additional room, which could be used for repayment and certainly further development in the future.

Aside from this, with the completion of digital cable TV upgrade, CAPEX should start to taper off and this should bring in more positivity along with the dividend cut for its future cash flow, something which is extremely important. Hence, I would like to believe that the management is being prudent in doing so.

The position initiated with APTT is a relatively adventurous one, or rather like what some would call it, a risky one as compared to the other counters due to the high level of debt they are in and the business they're engaged with. However, if we look at things from a different angle, we might get to see some light. 




APTT will continue to face headwinds and challenges in their business, but I believe at the new move should allow them to do more things than they originally could. 

We must be reminded that as investors, we are paid for the level of risk we take. The risk to take today seem a little more delicious and tempting for me which resulted in my itchy fingers pulling the trigger.

With today's price hovering around 16 cents, we're looking at somewhere between 7.5% yield for this investment, which is somewhere what one would typically demand for APTT, probably even higher. 

I'll certainly be happy to increase my exposure with APTT should the price continues to fall. I will soon write a little more about my thoughts on APTT.




*Coincidentally, right after my purchase, I happen to see many bigger hands scooping some of APTT shares!*

Read: APTT Q3 Financial Presentation 

SGR's Analysis (FA, TA) - Buying some dustbins in Wisma

I was just talking about increasing dividend income in my portfolio update earlier for February.

Screenshot taken from "Portfolio - February 2018"

Many would also be aware that I've been trying to add onto my holdings whenever I see some value or that Mr Market like what Benjamin Graham stated in his book 'The Intelligent Investor' is being moody or irrationale.

And in a blink of eye, only days into March.
It happened.

Mr Market seem to be a little pessimistic about Starhill Global REIT and it's shareholder is being punished for this.

I took this opportunity presented by Mr Market to buy somemore dustbins from Ngee Ann City and Wisma.

See. I told you, I'm buying dustbin.

Back to SGR. I've entered an extremely small position with them a year ago at 73.5 cents.
Fast forward to a year later, this opportunity comes back once again and I made use of this opportunity to accumulate another 1,200 shares of Starhill Global REIT at 0.71. In this case, I'm buying more dustbin.

Why would a teenage fella look to buy some dustbin? Strange.

Properties
So what do they own?
SGR owns commercial properties (offices and shopping centers) across 5 countries - Singapore, Malaysia, Australia, China and Japan, for which most of their revenues are derived from shopping center rental income.

Singapore properties: Wisma Atria, Ngee Ann City
Malaysia properties: Lot 10, Starhill Gallery
Australia properties: David Jones Building, Plaza Arcade (Perth), Myer Center (Adelaide)
China properties: Renhe Spring Zongbei (Chengdu)
Japan properties: Daikanyama, Nakameguro Place, Ebisu Fort (Tokyo)

Source: SPH - Wisma Atria

Source: SGR's 2Q FY2017/18 Investor Presentation - Slide 15

A big chunk (62.5%) of SGR's earning is derived from Singapore while the rest is derived from Australia (22.1%), Malaysia (13.2%) and 2.2% from it's property in Tokyo and Chengdu.

A fairly big part is contributed by Toshin's master lease which took up 21.1% of SGR's gross rental. Toshin's lease will be expiring in 2025. Having Toshin's share, it's both dangerous and beneficial for SGR.

With Toshin's master lease, SGR can rest a little on aggressively finding active leases. But this will also mean that if Toshin decide not to renew this master lease on 2025, they will be having some headache. But it's pretty much like FCOT's case which I've talked about previously. It will be good if they diversify themself a little and not over rely on one tenant. But guess, we will leave it for 7 years later.

NAV
Taking a look at SGR's latest financial statement, we can see that it's NAV stands at 92 cents/share. In this case, with the price at 71 cents. We're actually buying a 500k HDB for a price of 386k!

Source: Page 17 - SGR 2Q FY2017/18 Financial Statement

Ok.. Sorry. We're buying SGR at a discount of 22.8% off it's book value.
But is this the end? No!! More to go!!


Gearing
It's important to know the gearing for a REIT. Gearing refers to the level of a company’s debt related to its capital, usually expressed in percentage form. In this aspect, we're looking at how much they "owe".

It's never good to buy a company that has a lot of debt. But eventually debt is one thing that will fuel it's growth and espeically for counters like REIT, where they will need to borrow money in order to acquire properties as they do not have much retained earnings. REITs will have to pay out 90% of their income to it's shareholder which will result in them having little retained earnings.

It's not desirable to have a high gearing for REIT. Coupling with the fact that they have little retained earnings, REIT will look for rights issue when they want to acquire properties. This is when the REIT will come to you asking for money. In this event, if you do not subscribe to the REIT, your shares will be diluted and you're faced with a lesser value.

SGR has gearing of 35.3%

According to MAS ceiling of 45%, SGR does have some room for them to take up debt if they were to acquire properties without a rights issue.

Lease Expiry/WALE

Source: Q2 FY2017/18 Investor Presentation - Slide 20

Seems like most of their leases are expiring in FY18/19 and beyond FY2020/21. 

Looking at the earlier one, we see 35.7% of their leases based on NLA that will expire in 2018/19.

This 35.7% we see consist of Malaysia's master lease. This is one thing investors of SGR would like Should the renewual falls through, DPU will continue to fall and so do price as investor's proceed to sell their shares of SGR.

At a WALE of 6.4 years. It might seem a little more comforting.

Debt Maturity

Source: Q2 FY2017/18 Investor Presentation - Slide 14

Weighted average debt maturity comes at 4 year with most of it's repayment taking place after FY2020. The scary part should come in between FY2021-23 where most of their payments are due.

DPU

This is something that every investor of REIT is looking out for. 

However, we see some headwind in it's Orchard properties and DPU had decreased in 2017. With properties like Plaza Arcade and Lot 10 due by 1Q2018, we should be able to see some positivity out of this where SGR's rental income will increase. This will brings DPU higher than what we see now.

Taking 4.8 cents DPU in 2017 into account, we're looking at a yield of 6.7%, which look relatively delicious. However we must also bear in mind that this higher yield offered by SGR is in compensation for the greater risk we are participating in as compared to other REITs like MCT.

Technical Analysis

Taking a look at the chart. Seems like there's a big bear that ambushed SGR from behind. Price had fallen sharply below 50D, 100D MA and EMA. Price had also fallen below lower band of Bollinger Band with MACD crossing signal line southwards. RSI on the other hand suggest that SGR is over-sold today with a relatively healthy amount of seller we're seeing here today.

Some level of resistance can be identified at 72.5 cents, 75 and 77 cents while support can be seen at 69 cents and 67 cents upon breaching 70 cents support.

While it certainly does not look very beautiful for SGR, it seems like some opportunities might be presenting itself. I might be wrong. I don't know.

Thoughts

The closest match I could get would probably be MCT. However, as MCT is trading at a premium with a relatively lower yield, the offer does not seem as compelling as what I see in SGR today. On a side note, MCT does have a really impressive management which is really proactive and ensuring their unit holders get the most out of it, however for that case, it's compensated by the premium we see over it's book. 

It's nothing wrong to pay a slightly bigger price tag for a lesser risk and wonderful management. Good things usually comes with a premium. However, sadly, my wish to buy a dustbin in Vivo City has yet to materialize and I've failed to accumulate them when the boat comes. I do love Vivo City.

Nonetheless, should things turn out worser than expectations for SGR, I do have some margin of safety from the discount I receive from it's book price. A futher drop in price will just make SGR looks more attractive to me. Definietly one would say that the NAV might drop, but I'm comfortable with this risk I'm taking. Another important thing to remember is that the initiation of position with SGR is for income and not growth.

There might be some surprise element of capital appreciation when price move closer to it's book value but I'm in for the income SGR is able to offer me for the time being. To be more conservative, I will look at SGR with a yield of 6% which represents with a target of 4.3 cents DPU. Am I over-expecting too much from SGR? I don't think so.

Please remember the disclaimer!

Disclaimer: All information published on this site is only meant for general information purpose. No warranties should be carried out on the action that is taken based on information found in this blog and no liabilities will be undertaken by the owner for any losses/damages incurred from the use of this information.

SGR's 2Q FY2017/18 Investor's Presentation Slide can be found here.
SGR's 2Q FY2017/18 Financial Statement can be found here.

Analysis on Wilmar

I realized that I've yet to seriously share a full post analysis on Wilmar on my blog yet. I've shared on numerous occasions that Wilmar is a company that I will like to build my positions on so long the price provides me with an attractive valuation.

Honestly speaking, as far as I'm into Wilmar, the price had all along provided me with the comfort to add onto Wilmar but sadly, I do not have to capability to consistently fire my bullets without any war chest.

Some might wonder.. Why Wilmar?
Wilmar doesn't gives attractive dividend, do they?
The answer is. No.
A big no especially to income investors where they look to receive tasty dividends from Wilmar.

Or maybe a better way to say so is, not at this moment.

Investors of Wilmar would have known that an analysis on Wilmar is not as easy as it seems due to the extensive broad range of service that they are providing. Further more, Wilmar is cyclical business which makes the whole equation look more draggy.

For cyclical business like Wilmar, indicators we are often seeing such as P/E ratio only provides us with the outlook of the current situation and not how it is exactly priced as compared to other periods, as their earnings are fluctuating to the cycles.

When cyclical stocks are in the thriving part, their earnings will soar, which will cause the P/E to look smaller. Having that said, the EPS will also be impacted in the cycle. Assuming that they are having a fixed dividend payout ratio, investors may see a sharp decrease in earnings along with the dividend when these cyclical counters are in their downturn period.

This will naturally cause a sell-down as investors will start to lock in their profit, which subsequently the price will be matched to it's earning.

So a better indicator to use to gauge on how is much Wilmar worth will be it's P/B ratio. In this case, we will have to take a look at their NAV.

During the upper cycle of a cyclical stock, it is normal to see them trading at multiple times their book value. For example, Wilmar in 2010.

Wilmar's FY2010 Financial Report - Page 17

Wilmar at the end of FY2010 (31/12/2010), Wilmar is trading at S$5.63.

Taking a quick look back at the USD rates on 31/12/2010, we have USD-SGD at 1.2813

This will mean that Wilmar is trading at USD 4.39 with respect to it's NAV at USD 1.85, representing a P/B ratio of 2.37.

Wilmar's FY2016 Financial Report - Page 13

Base on their latest AR2016, Wilmar's NAV stand at USD 2.28.

With the USD rate (31/12/16) at 1.44, we will derive with S$3.28 per share.
As the NAV is priced in USD, using the rate today we'll be looking at a different value.
Hence, it's always good to use the same date to compute it's NAV.

Yes, that is right. You did not see that wrongly.
Wilmar has grown and became a more valuable company despite the down cycle and it's book value had grown by 23% in this 8 years when the price is beaten down to $3 from $6.

The lowest point during GFC, Wilmar was traded for $1.95 on 24 Oct 2008.
Back then, Wilmar's NAV stand at USD 1.50 (SGD-USD = 1.47). With that, we will derive a P/B ratio of 0.88. Today's price of 3.08 over latest NAV of 3.28, this comes up to a P/B of 0.93, which isn’t too far off the value we’re buying into during GFC back then

And even at this price, it does represent a small bit of margin of safety.


The shiny thing here I like about Wilmar is the direction the company is heading to, to make Wilmar a more valuable company that it is by placing emphasis on Growth and consistently looking for ways to grow the company.

Wilmar had been rapidly expanding, venturing aboard, acquiring businesses and even carrying new products. Having done so, this will provides the company will a greater moat in the future as well as creating more sources of revenue for the company.

BUT! It's important to remember that when they're fueling such activities, CAPEX will be swelling and it will takes some time for the profit to be seen. When CAPEX eventually tapers down, this is when the company will have a greater FCF and investors could be looking at a greater dividend payout.

Hence, investors of Wilmar will have remember why they are in Wilmar. 

Looking at a P/B ratio of 2 in the upper cycle base on the NAV we see above, we will easily get $6.56 and a more conservative price of $4.92 for 1.5x book value based on the latest NAV ending 2016. But, this will only happen when the cycle goes back north.

I believe that even paying a fair price of 1.2x book value for a company with such impressive management is decent and this will comes to a price of 3.93. At today's price, it even provided me with a margin of safety! Delicious.

Even ADM (Archers Daniel Midland) was paying $3.37 a share in 2016! (Link below)

Buying a good business at fair price VS buying a fair business at good price?

However, being an extremely diversified business, losses incurred will easily wipe out profits, causing performance to be restricted. The other side to this coin is that, the performance will be more stable, and in the most favorable situation where more businesses are performing, you will be see the earnings rocket.

Yes, they're a major super-power in Palm Oil, but today, Wilmar is no longer just about Palm Oil, but many other businesses as well.

Some catalyst that we might be looking at in the coming days will be the upcoming listing onto Shanghai Stock Exchange in Mid-2019. (Link below)
I believe this event will create more funds for Wilmar to continue it's growth and expansion.

In conclusion: 
1. We have to know why we are investing in Wilmar - For it's growth and value
2. For that reason above, we will require patience
3. Some catalyst that will bring in some sparks will be the recovery of sector as CAPEX tapers off
4. Very diversified business provides us with a more stable performance but will also limits earnings due to losses incurred in other businesses, the most desirable outcome will be for the whole sector to thrive
5. We're putting our money with Wilmar for our dollars to grow, and not to rent out houses to collect rental. (Look at Berskhire which does not gives out dividend and reinvesting their dollars)
6. Despite the down cycle, Wilmar is creating value and is in the vision to create more by acquisition, expansion and venturing aboard.



Read: Wilmar's Technical Analysis

Wilmar's FY2017 result (ending 31/12/17) will be released tomorrow (22/02/18) after trading hours.
News on ADM's increase stake in Wilmar can be found here - Reuters
News on Wilmar's IPO in China can be found here - Nikkei  
Wilmar Annual Report 2006-2016 can be found here.

Wilmar's Technical Analysis

It's Sunday again. Time truly flies. And on this boring Sunday today, I've decided to do another Technical Analysis post on another company that I own - Wilmar. Once again, please pardon me for the poorly done TA.

Pretty much similar to Singtel, Wilmar's share took a beating and fell from the 3.4 range in November to the recent days where it broke it's 3.00 mark.

Wilmar's chart today display a relatively bearish trend.

You can plot your own graph on InvestingNote

The price for Wilmar gapped down on Friday when the market open and Wilmar started trading at 2.97. Shortly after this level of support is tested, the price rebounded back to the 2.99-3.00 range, before finally closing at 3.00.

We can see a small pinch in Bollinger Band somewhere around late Jan. This action suggest that the moving average is constricted and pretty much. volatility increased after the pinch. The price on Friday has breached the lower band slightly which is indicating that Wilmar is entering the over-sold region.

Taking a look at the next indicators of RSI, we obtain a value of 28.80 which suggest that Wilmar is oversold. The price today has fell below it's EMA, 20D MA and 50D MA which signals that Wilmar is currently in a downtrend.

The negative MACD value we can see also tells us that the short term moving average is below the long term moving average. As per pointed above, this signals a downward momentum and our dear Bear is in action.


While looking at the MACD graph below (most bottom), we can also see that the MACD line (Blue) is away and below from the Signal Line (Red), signalling a Bearish market. At this point, there is no divergence seen as both MACD and Wilmar's share price is moving downwards, this will also tell us that this bear attack might continue.

While MFI does not suggest that Wilmar today is over-sold, but it is much closer to that region than it is to the over-bought region at 36.73. If we get the formula in, we will be able to obtain the MFR base on MSI = 100 - 100/(1 + MFR). Work it backwards, we will obtain a value lesser than zero.

This will suggest to me that the money flowing out is greater than the money that is coming into it. The situation here is much better than Singtel's situation where greater amount of money is flowing out of it.

Using the Fibonacci Retracement certain potential areas of support could be seen at 2.86, 2.79, 2.74 should it once again break the support at 2.97. Likewise, the next area of resistance can be identified at 3.06, 3.14, 3.19 and 3.24. 

At today's price, I can see an attractive value and opportunity presenting for myself to buy more shares from Wilmar. However, as I've promised to strap my fingers to myself, I should now learn to resist onto the temptations!

Also, at this current point where the downtrend might continues, it is better to stay at the side while monitoring the situation.

Wilmar's 1 year chart from Google

Do remember that, TA is all about the probability and not certainty.
Most importantly, the high can get higher and the low can get lower. Once again, please only take this poorly done TA as a pinch of salt.


Oh yes.

Technical indicators and charts aside, the price we see today is below it's NAV and it's priced below 11x their earnings. Concerns about the major market for palm oil, Europe to phase out palm oil in biofuels also posted a threat to Wilmar recently. Aside the European, the 2 other biggest market for palm oil are China, India and not forgetting the other markets like Africa and Middle-East market.

However, Wilmar's investor should also remember that their operation does not only consist of this segment and it compasses a wide breath of operations.

Factoring the uncertainty and pessimism in, the price looks rather appetizing. On a side note, the price we're paying today for the wonderful management in Wilmar does provides some comfort.

We should also remember that Wilmar had conducted share-buy back in 2015 at 3.03 when they felt that the share is currently undervalued. Considering that it had fallen below the price they paid during the last buy back, history might repeats itself and should that happen again, we will get to see some tale from this action.

Once again, I must remind you that, this counter we see here, is a not an ordinary counter. We must also be reminded that by investing in Wilmar, we must be able to see the value and upcoming growth prospect.

Another catalyst in the upcoming days that we can look upon aside the delicious growth prospects of Wilmar will be the listing of it's China unit and list on the Shanghai Stock Exchange in the second half of 2019.

I continue to love the confidence and optimism Mr Kuok has on Wilmar and this brings in another layer of confidence for myself as a pico investor of Wilmar.


Read: Analysis on Wilmar

ST news on Wilmar's share buy-back in 2015 can be found here.
CNA article on EU's Palm Oil Ban can be found here.
Nikkei Asian Review article on Wilmar's listing of China unit can be found here.

Please don't forget about the disclaimer!

All information published on this site is only meant for general information purpose. No warranties should be carried out on the action that is taken based on information found in this blog and no liabilities will be undertaken by the owner for any losses/damages incurred from the use of this information.

Singtel's Technical Analysis

Singtel, one of my favorite stock is the current most frequently debated topic based on the latest movement of it's share price and the tremendous increase in volatility in the recent days. Do pardon me, on my very first post on Technical Analysis, and to trading gurus and seniors, feel free to correct me should you have spotted any mistakes in this post :)

Coming to it, here, we see a very bearish chart from Singtel.

You can plot your own graph for free on InvestingNote as well!

With just a simple look at it, one will be able to easily tell that Singtel in currently in a downtrend.

The price today at 3.49 has breached both it's 20D MA (3.59) and 50D MA (3.63). As much as it had slightly breached the 3.49 mark, slipping to 3.48, immediate support can be seen building at 3.49 which have held the price up till it finally closes.


The Bolliger Band can be seen expanding much in the later days, which suggest that currently, the price are relatively volatile and if anyone notices, the lower band has also been breached with it's most recent price movement, suggesting that it might be oversold.

RSI at 28.45 also shows that it Singtel is currently at the oversold region. The negative MACD value we can see also tells us that the short term moving average is below the long term moving average. As per pointed above, this signals a downward momentum and Mr Bear is in action. 

Using the key Fibonacci Retracement ratio where potential areas of support could be seen at, we can see the next support level at 3.42, 3.38, 3.35 and 3.31, should it once again break the support at 3.49

I will standby at these beautiful levels, to queue behind while waiting to get some Singtel shares that is on promotion.


Now, let's take a look at the more esoteric indicators and see if tells any tale.

The MSI today (16.7594) also suggest Singtel is in the Oversold region.
However, if the downtrend is strong, this will also brings the MSI lower.

Taking a closer look, we will be able to find a relatively small money flow ratio that is below 1 if we work the formula backwards. Now this signal here is telling me that positive money flow is lesser than the negative money flow. In layman term, the money flowing out is greater than the money that is coming into it, which is not very healthy here.

Want something more esoteric?
Based on the chart, we have entered a relatively sharp zig-zac corrective wave based on Mr Elliot's theory and it seemed like we might be entering the end of a wave soon.
 


While waiting for the financial results for 3Q18 to be released, fundamental wise, all else remains equal apart from the latest news on it's cyber security business which is said to hit around $550 million in revenue this financial year.

Singtel's 3Q18 financial results will be released on 8th Feb 2018, which is 5 days away.

Cyber security is a good business that Singtel today is diversifying on, which will further reduce the dependence on mobile communication sector. The increased exposure in ICT will also reduces the risk of facing the declining revenue from TPG's entrant.

I remember one good phase from one wise senior - TA is all about the probability and not certainty. Hence, do take them as a pinch of salt and pardon me once again for this poorly done TA.

Do remember that the high can get higher and the low can get lower. The latter example is clearly exhibited today.

Singtel's chart from Google

If we look back into time, the last time Singtel enter the 3.4 range is 2 years back during January 2016 and back in early 2013. Doing a quick search, the last time (Jan 2016) Singtel entered this price region, is the period when China's stock market bubble back in 2015-16 exploded. (Yes, I like the word exploded.. hehe).

Hence, if we were put our glasses back on, today's market does not exhibit any significant trait that I know of that was as impactful as the China's market crash which might drag Singtel's price down back to this region.

And given that, Singtel in 2018 today, should be a company that is in a relatively well position compared to they are in 2016 with the cash on hand, reduced debt and divestment of Netlink Trust.

Nibble time.. Nibble nibble. Time to be a small little rat!

I do not recommend any buying or selling of any securities based on any post that I've written.
If you're buying in and not too sure why, do remember to find a reason to support your buying.
Buying for income? You have many other alternatives available.
Buying because it's the biggest company in SGX? It's now DBS.
Buying because it's backed by Temasek Holdings? There's more available. Click here to find out more

Straits Times news on Singtel Cyber Security Business can be found here.

Read:
Singtel - Special Dividends of 3.0 cents per share 

Portfolio Update - Far East Orchard

2017 is a great year for property developers. A number of property developers on the SGX such as CDL, UOL, Wing Tai and even recently, Guocoland had a significant run up since the start of the year.

Far East Orchard had been in my radar for sometime and it's a small pity that I missed entering at 1.4X range. However, after much analysis and earlier today, I've initiated a position in Far East Orchard of 800 shares at the price of $1.515

Far East Orchard is a property developer that has a real estate portfolio that can be split into 3 segments - hospitality and property and investment. With an outstanding shares at 422.6 million and price of 1.50, it has a market capitalization of 633.9 million.

Business structure of FEO

1. Property segment
FEO's property segment consists of property investment whereby they hold the properties and leases them out for rental income and property development projects.

Property Investment includes:

1. Medical suites: Units at Novena Medical Center & Novena Specialist Center
2. Student Accommodation: In Brighton and Newcastle upon Tyne
3. Offices: Tanglin Shopping Center
4. Shops: SBF Center @ Robinson Road (20%)

Property Development Projects includes:

1. Residences: euHabitat (20%), RiverTrees Residences (33%), Harbourfront Balmain in Sydney (50%), Floridian & past projects such as Regent Grove, Glendale Park, West Bay Condominium etc.
2. Offices: Wood Square (33%)
3. Industrail: Tannery House

The student accommodation in UK (Brighton and new buildings on Newcastle upon Tyne) is currently in the progress of development and is expected to complete in 3Q2017. The opening of this student accommodation facilities will brings in more revenue to FEO in their upcoming FY2018. 

It's also good to note that there's a good number of investment properties in FEO that are of freehold. The benefit of freehold properties building vs leasehold building are that the leasehold buildings will be subjected to a rate of depreciation over time. 


Harbourfront Balmain in Sydney has already been completed and is currently in the selling phase. In their upcoming financial reports, which the sales of HB will be reflected as their revenue in this next financial report. Currently, there is only 5 units remaining and 1 resale unit left.

Details of HB's sales can be found here.

The student accommodation in UK also has a free-hold tenure. The long-term fundamental of UK property market does look appetizing and will definitely be better after the Brexit.

2. Hospitality segment
FEO's segment includes management services, operations and property ownership. Their hospitality management arm - Far East Hospitality, operates over 90 properties with close to 14,000 rooms that spans across Australia, UK, Germany, Denmark, Singapore and Malaysia.

These properties includes Orchard Parade Hotel, Village, Quicy, Oasia and Rendezvous brands of hotel in Singapore & Australia and Adina Apartment Hotel in Copenhagen and Berlin. The concentration of hotels are slightly heavier in Australia and Singapore.

Hospitality is a cyclical industry and the current outlook for the hospitality sector in Singapore is weak due to the large supply of hotel rooms with a softer demand. On the Australia front, hospitality industry is positive, however different across the different cities in Australia.


3. Investment Holdings
FEO also has 33% of shareholdings in the REIT Manager and Trustee Manager of Far East Hospitality Trust (FEHT). 

Now, after knowing what their business is. It's time to take a look at the various metrics for FEO.
As the earnings for property developer varies from time to time depending on their development projects, to understand a property developer better, metrics such as P/E will not be able to accurately tell how much it's worth.

Net Asset Value
FEO's NAV at the end of 2Q2017 results stands at 2.89, and at the price at 1.515 today, this will mean that they're currently trading at a very big discount of 48% to their book value.

NAV of Far East Orchard as of 2Q2017

At this price, they're very undervalued and that it also provides a huge margin of safety for me at this entry price.

A comparison between it's peers with regards to their P/BV ratio is as follows:

Wing Tai's P/BV Ratio too represent a great discount at the current price with a 45% discount, which had a run-up recently and is close to trading at it's 52W high.


Debt-to-equity ratio
FEO at the end of 2Q2017, had a total gearing of 21.97%. As a property developer, they're quite reliant on loans and debt is most frequently used to finance their assets. As such this is also one metric to look out for. Comparing to it's peers like CDL, which has a gearing of 63.74% and a closer match, Wing Tai at 28.22% and UOL at 29.65%, FEO is relatively fine as compared to it's peers when there is an interest hike from fed.


Dividends
Ahhh. Now to the part about dividends. For the past 7 years since 2011, FEO has been regularly paying out 6 cents of dividend to it's shareholder. At this price of 1.515 I'm paying today, it translates to a dividend yield of 3.96%. I'm pretty comfortable with receiving 3.96% dividend from a property developer while waiting for it's value to unlock.

Currently at the end of 2Q2017, their EPS stands at 1.56 cents for the FY2017.

  
Who is behind FEO?

Far East Organization Pte Ltd have a 60.99% direct interest in FEO and it is founded by the late Mr Ng Teng Fong, the richest man in Singapore. Currently, it is being overseen by the son of Mr Ng Teng Fong, Phillip Ng. Together with the sister company of Far East, Sino Group - the largest property developer in Hong Kong. Far East Organization is also the largest landlord and property developer in Singapore.

However, with a high interest from Far East Organization, it may both mean a good/bad thing. The performance of FEO will be hitting the Ng Family directly, should the stock not perform. At the same time, the interest from Far East Organization which exceeds 50%, they will also be able to conduct a buy-out easily when they feel that their stocks are too cheap.

With the public float of 133.87M share, it will be not be difficult for the parent organization to fork out S$267.74M, at a privatization price of $2/share which will translates to 30% on their NAV when they feel that the share price is too cheap.


It's also good to note that with the run up from the fellow property developer peers, hopefully that this laggard will be able to follow up and not forgetting that the hospitality sector about to turn around. With fingers crossed, let's hope that FEO will be able to turn around with the possible catalyst in the future.

The initiation of FEO is more of an asset play, whereby the combined asset value is much higher than it's market capitalization, and backed by assets. While waiting for it's value to unlock, I'm happy to be paid close to 4% dividends :)

2Q17 FEO's financial statement can be found here.
DBS research on Hospitality Sector can be found here.