Bukit Sembawang Estates

Bukit Sembawang Estates

Company Profile

The company, set up in 1967 to acquire the Lee family's Bukit Sembawang Rubber Co, has its land concentrated in the established landed residential district of Seletar and Sembawang.The principal activity of the Company is that of an investment holding company whilst the principal activities of the subsidiaries are those of property development, property mortgage financing and the holding of properties and investments. The Group mostly developes landed properties around the Seletar and Sembawang areas.


EPS ($) *0.68379
NAV ($) **7.7351
Price $13.40
52 Weeks High16.50
PE19.597
Price / NAV **1.732
Dividend Yield) 3.358
52 Weeks Low11.10
Market Cap (M)321.600
Par Value ($)1.000
Issued & Outstanding Shares24,000,000
* Based on latest Full Year Results Announcement** Based on latest Results Announcement (Full Year, Half Year or Interim)



Hidden Assets


A quick glance at the fact sheet suggested this is one of the most expensive listed property development firm, trading at a ludicrous 73% premium to its NTA, something unheard of in SGX. However, there is more than meets the eye as there are plenty of predatory vultures prowling in stealth, accumulating Semb. Estates on the cheap. Every single item quoted in the Annual Report is at 1967’s cost of acquisition when the bulk of the assets were purchased from Bukit Sembawang Rubber Co. No endeavor is made to reassess the assets at current market value, thereby it proved almost impossible(for retailer) to put a definite price tag on their massive land bank when an independent valuation report isn’t conducted yearly.


Financial Assets

(Page37 of AR03)

Quoted Securities 2003 2002
At Cost 13.12 Millions 13.25 Millions
At Mkt Value 62.38 Millions 75.54 Millions


If these securities are re-quoted at market value, it will boost the NAV by a hefty $2.05 per share. Nothing is disclosed on the composition of these securities but I suspect these are scripts of either OCBC or Great Eastern as the Lee family owned around 40% of Bukit Sembawang. However Bukit Sembawang is not embroiled in the asset divestment fiasco mandated by MAS as the cross-shareholding webbing is non-existent.


King of Seletar Hill

Location Tenure Site Area(Sq M) Description

Seletar Hill
Lot13764 Freehold 12,356 Initial Site Area of 36,068. However
Phase1,2 and 3 has been completed.

Lot 9425 999 Lease 218,944 Development of 944 Units. TOP 2009
from 1879

Lot 12949 999 Lease 116,860 Non-residential Land
from 1879

Lot9934 Statutory 18,589 Non-residential Land
Grant

Sembawang Area
Lot2104 Freehold 21,585 Only 7 out of 67 units Of Straits Garden has Been sold as of 31 Mar 04.

Lot2099 Statutory 20,420 Proposed 48 units to be built. TOP 2008
Grant

Total Site Area 4.34 Million Sqft
Mkt value of Undeveloped land parcel
*(Total Site Area X $(510-300)Sqft X 1.4) $1.27 billion
Cost of Land Parcel ($80.29 million) Item 4 of AR
Estimated Gains $1.20 billion

Landbank information is accurate as of 31 Mar 04

*1. 1.4 refers to the conservative estimated gross floor ratio
2. $510 psf refers to the conservative avg. selling price of properties in the Seletar Area.
Mimosa Terrace selling at around $585 psf
Mimosa Gardens selling at $744 psf
3. $300psf refers to development fees and costs.


Factoring in the unrealized gains of the equity securities and revalued landbank, RNAV per share works out to a staggering $47.80 per share. Assuming a prudent valuation by marking down the RNAV by another 20% due to adverse market conditions , we arrived at $38.20 per share which is a unfathomable discount of 285% over the current share price of $13.40.

Analyst Report

According to an ABN Amro report dated May 99(unfortunately I don’t possess that report, these abstracts are leeched from Business-times), the revalued net asset value of the company is as much as $ 30 a share, assuming the most conservative scenario of zero value for non-residential land.
Back in 1999, Bukit Sembawang’s landbank amounts to 4.7 million Sqft which stands at 4.34 million Sqft as of 31 Mar04 with 33% being classified as non-residential property. One might queried that the outdated report holds no relevance as things are no longer the same as before. However, except for the diminution of landbank from 4.7million Sqft to 4.34 million Sqft, landed property prices had in fact inched up by 7.6% since early 99(refer to chart below) when the analyst report was drafted.
After some tweaking of $30/share derived by ABN Amro through accounting for its non-residential land parcel, Bukit Sembawang’s RNAV should be around $44 which is pretty much in tune with my pseudo analysis.



Figures stolen from URA

Non-residential Land- Cause for worry

On 27th Jan 04, Bukit Sembawang Estates received provisional permission for a 138-unit terrace and semi-detached project on a sprawling 901,961 sq ft site in the Seletar Hills location. However I am unable to pinpoint the exact land parcel cited as the site area do not concur with the existing landbank. However, it should belong to one of the two remaining non-residential land parcels as they are the only properties yet to received provisional permission.