$$$ KPO and CZM $$$: Tuan Sing

Thursday, March 29, 2018

Tuan Sing

Company Description from SGX StockFacts - Tuan Sing Holdings Limited, an investment holding company, engages in the property development and investment, hotels investment, and industrial services businesses in Singapore, Australia, China, Malaysia, Indonesia, Europe, and other ASEAN countries. Its Property segment develops and invests in residential, commercial, and industrial properties; and provides property management services. The company’s Hotels Investment segment owns two five-star hotels managed by Hyatt International in Melbourne and Perth, Australia.

Tuan Sing has always been on my watchlist and I have finally decided to enter it this week at $0.42. It was first brought to my attention by a friend last year but I did not buy because there were other opportunities or its price has gone up. Since then, UOB has published a buy report and B from ForeverFinancialFreedom (Recent Action - Tuan Sing) has accumulated some too.

What I like about the company is that most of its properties are freehold. Some of the properties are at prime locations such as 18 Robinson and Robinson Point and there are others not captured in the above screenshot. Most importantly, it is currently trading at a steep discount (PB of 0.505).

Tuan Sing Sector Comparison by ShareInvestor

Its NAV based on the latest annual report is $0.83. Assuming if it was to trade at the industry average PB of 0.6594, the price would be around $0.545 (~30% upside from current entry price). What really caught my attention and led me to pull the trigger is the letter to shareholders. One of its agenda for the upcoming AGM is the renewal of the share purchase mandate.

By doing shares buyback and keeping the shares as treasury shares, it reduces the number of issued/outstanding shares. This has an opposite effect as compared to rights/bonus issues (dilution on existing shareholders). The chairman gave 5 reasons/rationale for the share purchase mandate, do take a look if you are interested. If the mandate is approved, its NAV will increase to $0.868 - $0.870 because there are now lesser shares available for the same underlying assets. What a bargain!

Looking at its past 5 years performance, shareholders' funds and NAV has been increasing year on year. Dividend has been kept constant/increasing slowly over the years since 2010 and the yield is around 1.7%.

During Oct 2014, it traded at a high of $0.475 with NAV of $0.683 (PB of 0.695). Over the next few months, it went to as low as $0.27 and has never "recovered" despite increasing NAV and dividend. 

It is certainly not due to its corporate governance as Tuan Sing was ranked 7th out of 606 listed companies in Singapore based on the Governance & Transparency Index (GTI). This is a collaboration between CPA Australia, NUS Business School's Centre for Governance, Institutions, and Organisations (CGIO), and Singapore Institute of Directors (SID) and you can find out more information here.

So why is it trading at such a steep discount? Your guess is as good as mine. Slumpy earnings? Low dividend yield? Tuan Sing explicitly states in its Dividend Policy that "The Company’s priority is to achieve long-term capital growth for the benefit of shareholders. Most of its profits, when made, shall therefore be retained for investment into the future." Even my DBS Multiplier is giving higher interest rate than the dividend yield. lol. Regardless, this is an investment for one with patience :)

Happy long weekend everyone!

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  1. Hi KPO,

    I've been looking at Tuan Sing for a really long time. I like that Tuan Sing is getting more valuable over time with it's free hold properties. It also has a relatively strong interest from Mr Koh and the Liem family.

    But wait. I managed to strap my fingers for some time. But once in a blue moon, I'm still itchy. Crap!!

  2. Hi KPO

    I am also trying to accumulate this one. While the yield payout is low, I think it will increase good over this year with Robinson ready to contribute. That payout alone at 33% payout.

    Too bad my cash is low now so Ive gotta delay the accumulation to next quarter after receiving dividends. :)

    P.S: Ive just finished reading their annual report and gosh its so thorough. Great governance there from the management.

    I'm probably also attending the agm. Will you be coming?

    1. Hi B,

      Yeah. I believe by then it should be more "appreciated" by the market.

      Probably not. The AGM is on a weekday and annual leaves are precious for one planning to get married and go on a honeymoon. Hahahaha. Do share/blog about the AGM if there's any interesting update! Thanks in advance! lol.

  3. No point not rewarding SH even if the company sitting on goldmine.

    1. Hi Desmond,

      I am guessing you are referring to the low dividend yield? There are many ways for SH to be rewarded. Growing the company/business is also one.

    2. Watching the Robinson Tower itching towards the completion day by day (nearby my work place), I certainly hope so...Vested :p

    3. Haha. I see. You did not sound like you are vested initially. Huat ah!