$KSH(ER0.SI) 2019 AGM Highlights

Investors of KSH and their JV partners would be happy to know that the KSH Executive Chairman Choo Chee Onn confirmed the official launch date of Oct 2019 for the massive 5.3 million sqm Gaobeidian Project at the company’s AGM last Friday. The project launch had been delayed a couple of times, first due to Beijing’s cooling measures which requires the homes construction to be 30% completed before sales can start and delayed again last October due to “the uncertainties caused by the trade war”. Mr Choo, who just came back from China revealed that the main reason for the delay was the additional cooling measures which restricted the sales to local residents only which means that those from Beijing cannot buy. The local government has eased these restrictions and now non-locals will have to pay social security for 3 years to be eligible to purchase in Gaobeidian.
Even with this condition, the JV company is confident enough to launch the first 100,000 sqm, about 820 units at a price of RMB 8,000 per sqm. They will quickly release more units once 50% of the units are sold. Although the launch price is a far cry from the RMB 20,000 psqm in nearby Baoding after news of the Xiong’an SEZ was released, the Gross Margin is a respectable 50% as their cost is around RMB 4,000 psqm.
Another piece of interesting info that the Chairman revealed is that the long term plan for their 13 overseas hotel properties is to form a Reit. Looks like everyone is jumping into the Reit wagon. However it’s a long time coming as 6 of the properties are still under development and they still have to wait for the income to stabilise first. They will also be adding more hotels in the meantime.
Together with the good sales of their Singapore development projects, the prospects of KSH is looking very bright however there will be much pain before gain. Due to the new financial reporting standards; for residential developments all interest expenses will have to be expensed instead of being capitalised previously. This would massively impact the profitability of KSH and their JV partners as their projects are only at the start of construction but have taken huge loans to purchase the land, etc. I expect their profits to be impacted for the next one year at least. Not a problem if you are a long term investor. Vested 50k shares, please DYODD.

$Oxley(5UX.SI) ,$Lian Beng(L03.SI) $SLB Dev(1J0.SI) ,$Heeton(5DP.SI)

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Although the STI did no go up much (<2%) for the month of February, my portfolio performed much better (+11%) this month thanks to the following counters:
$AEM(AWX.SI)
$Sunpower(5GD.SI)
$Accordia Golf Tr(ADQU.SI)
$Silverlake Axis(5CP.SI)
$Sasseur Reit(CRPU.SI)
$Oxley(5UX.SI)

My conviction and patience have paid off. Even Oxley which have been on the downtrend for so long has finally started to move up, however it’s still underwater for me. Last week I took 23% profit for AGT. Today, I sold all my Silverlake shares at 31% profit. I also sold 20% of my AEM share at 33% profit. And for Sunpower, my average price is 0.44 and I will sell my 2nd batch after the results release tomorrow.
As for Sasseur Reit, I will be keeping them for now. It is still CD with a 3.541c dividend coming up. I believe their outlet sales can continue to grow and it should be able to payout a dividend yield of at least 8.5% after XD.
I first bought Sasseur reit 5 months ago. I did not buy much as there is no track record and the malls are in China, it will be difficult to monitor how there are doing. However I believe in their business model and even added more during the recent price drop before the results release. The results were better than expected and it proves that the Outlets model is resilient to online shopping and even the trade war! The 4Q DPU is 28% above forecast. This is despite the fall in the RMB/SGD exchange rate. The reason for the good performance is that the 4Q is historically the period with the highest sales and also that they no longer have to keep reserves in case of poor performance. This REIT is difficult to understand and is not for everyone, please see my previous post if you want to know more: https://www.investingnote.com/posts/1019661

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