Tuan Sing Holdings Ltd - CIMB Research 2017-11-03: Catalysts Abound In 2018

Tuan Sing Holdings Ltd - CIMB Research 2017-11-03: Catalysts Abound In 2018 TUAN SING HOLDINGS LIMITED T24.SI

Tuan Sing Holdings Ltd - Catalysts Abound In 2018

  • Tuan Sing is a conglomerate with property, hospitality and industrial exposure.
  • Rentals and hotel operations made up 28% and 34% of 9M17 revenue respectively.
  • Redevelopment of properties should unlock value and boost underlying value.
  • Tuan Sing's Share price is trading well below its book NAV of S$0.78 and RNAV of S$1.10.

A property conglomerate 

  • Tuan Sing is a property conglomerate with property development, investment and hospitality activities, spread over Singapore, Australia and China. It also holds an 80.2% stake in SP Corporation, which is engaged in commodities trading and tyre distribution as well as a 97.9% stake in Hypak which manufactures and markets polypropylene bags in Malaysia. 
  • It also owns 44.5% of Gul Technologies which manufactures printed circuit boards with three plants in China.

Boosting rental income from development properties 

  • For 9MFY17, property development and investment operations accounted for 28% of revenue. This is derived largely from rental income from its office and other properties in Singapore and Australia. 
  • The most notable of these properties are Robinson Point, Melbourne Grand Hyatt commercial space and Fortescue Centre in Perth.

Hotel operations provide a stable income base 

  • Hotel operations make up 34% of revenue for 9M17. This is derived from a portfolio of 915 rooms at the Grand Hyatt Melbourne and Hyatt Regency Perth. 
  • Although hotel revenue slipped marginally during this period, we remain optimistic about this portfolio, given its excellent locations in Melbourne and Perth.

Potential for significant value creation 

  • In 2018, the group expects to complete 18 Robinson, its office development in Singapore as well as finalise its plans to optimise the value of the recently purchased Sime Darby Centre. On Sep 17, it had obtained written planning permission from the City of Perth for a planned asset enhancement at Hyatt Centre and development of vacant Plot 11. 
  • The AEI will offer close to 20,000 sqm of retail spaces upon completion by phases in 2019. These activities are expected to create value and boost Tuan Sing’s NAV.

Trading below RNAV of S$1.10 

  • Tuan Sing’s net gearing stood at 1.37x as at end-Sep 17. 
  • The stock is now trading at 0.54x to its book NAV S$0.78 and at a 62% discount to RNAV of S$1.10.

Target Price: N/A

LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2017-11-03
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