Expiry:
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$1.8
(+129.30%)
NOW:

The Shanghai Bund and My Hotel Shopping Spree

The (Shanghai) Bund 上海灘 was a TVB drama in the 80s. The theme song was a hit in that era, I did a search and found the translation of the of the cantonese lyrics to english:

Rushing waves, flowing waves
Thousand miles of the torrential river flows ceaselessly forever
Washed away the worldly affairs
Torrential mixing of the tidal currents
is it happiness? is it sorrow?

Hard to differentiate between happiness and sorrow in the waves
Success losing
Hard to see in the waves
Love you, hate you
Asked you if you know

Like a giant river, once distributed will not be withdrawn
Passed by in many bays
Passed by many beaches
Still not yet to suppress these struggles
Both happiness and sorrow

Unable to differentiate between them
Still wishing to overcome these waves
My heart has enough of those rises and falls
Still wishing to overcome these waves
My heart has enough of those rises and falls

Wow, sounds or feels familiar? Can become a Trader's Song, maybe "The Trader's Bund".

Anyways, this post is not about The TV Bund but some stocks that I have recently purchased, no doubt. However, it is related to a westin hotel and office tower, The Bund Center, located in Shanghai Bund, a magnificent looking one as in the pic attached, the crown is just too hard to be missed, but not the quiet stock, BCI,which is listed in SGX, abandoned with abundant value.

BCI also owns a shopping mall in NingBo, Golden Center, besides The Bund Center.

Bund Center Investment, BCI, was a spun off from AFP (now Sinarmas Land) in 2010. They have only 2 assets as mentioned above, so asset value is pretty straight forward. The book value stated is 55.3c and the price is 78.5c, not cheap right? But the NAV is booked conservatively at cost of about 450M, in it's AR the revaluation was around 2B, the market cap is about 600M, so roughly, it is now trading at a deep discount of 70% against it's RNAV. Comparing to it's peer listed in SGX, it's doesn't seems right in it's current pricing. Of cos, if you just use some stock screener, you can't find this gem. Moreover, dividend yield is about 4%.

What really catches my eye is the public float of this illiquid stock, 84% of the shares is held by the major shareholder Flambo Bund and 5% is held by UOBKayhian, so I think effectively there is only 11% free float in the market. Total liabilities is only 43M and 80M in cash, this could be a great candidate for delisting too, if the major shareholder decides to put it's assets on sale and cash in.

RHB had an analyst report on BCI (link: http://research.sginvestors.io/2017/04/bun...) but given that it's an illquid stock, it is understandable that the market is keeping a blind eye on it and thus presents an opportunity for value investors to collect it's shares, for how long? Who knows?

Give it a 30% discount to RNAV, we get $1.80 in price.

The wind seems to be changing, hotel stocks are in the lime light now. I have also been busy nibbling Far East Orchard since the beginning of the year and more recently, Hotel Grand, which could be selling off one of it's hotel in orchard.

With these 3 hotel related stocks, I hope to ride on this rushing tidal wave for the remaining months of the year and wish for more happiness than sorrow. Always expect the unexpected in the stock market, it could be more dramatic than the Shanghai Bund, just need to watch patiently till the end of the show.

$Bund Center(BTE.SI)

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ozxinvest

Correction to earlier comment: the ningbo golden center actually consists of two leases: the 6-storey complex expires in 2045 same as bund center, the smaller annex expires in 2033 as shown in the ar2016 table.

As can see, the total assets valuation is 1999 million, the book value is 427 million and the market cap is 580 million.

ozxinvest

https://www.edgeprop.sg/property-news/capi...

Another china mall being acquired, valuation per sqm is higher than ningbo golden center as it is newer and lettable area is about 3.5 times larger.

ozxinvest

If they do that, people will start to believe and take notice of its revalued surplus of NAV amounting to close to $2. even if there is no deal.

ozxinvest

There are demand for shopping malls in China, funds are looking, BCI can take the chance to put on sale and offload ningbo's golden center shopping complex.

ozxinvest

2c interim dividend declared. q3 net profit increased by 5.2%, 9M YTD net profit decreased by 9%. However, cash and equivalent continues to increase by 14.5M to about 94M. eps YTD is 2.77c Vs 3.05c.

ozxinvest

The Shanghai property market remains very robust.

ozxinvest

Looking at the net cashflow, BCI could probably generate another 30M for the next half year, which could bring the full year cash on hand to 110M, given that they do not have any growth plans, highly possible is to give back excess cash to SHH again. Let's say they payout half of it in Q3, it could be in the range of 6 to 7c this year, although normal expectation is 3c plus. They may possibly give out the rest as final dividend in Q4, I hope. At 78c per share, that would translate to about 8 to 9% yield, which is in line with it's 3 years average. Compare to it's peer, it means there is a lot of catch up in price and it could be easy, as liquidity is low. Let's see what Mr Market will do.

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