SPH

Tat is the reason why the share peice did not go up for

donkey years inspite of many analysts recommending

this counter.You buy into it for dividend ONLY

Cheers and good luck.

This is 42% above the second-highest bid of S$382m from a venture

between Keppel Land's Alpha Investment Partners and Guthrie

SPH: HOLD (Downgrade from Buy) S$3.89; Bloomberg: SPH SP
Overpaying for the mall;
Price Target : 12-month S$ 4.00 (Prev S$ 4.22)
By: Andy SIM  CFA +65 6398 7969

  SPH’s JV put in a bid of S$542m for Clementi Mall, 42% above second
  bidder

  Costly at c. S$3,055 psf NLA, vs other bids and latest valuation of other
  suburban retail malls

  Downgrade to Hold; lower TP: S$4.00

S$542m bid for Clementi Mall.  SPH, in a JV with NTUC, submitted the
highest bid of S$541.9m (amongst 6 bidders) for a 25,000 sqm GFA shopping
mall at Clementi, in a tender that closed last evening (10 Nov). The bid of
S$541.9m was above-market-expectations and is c.42% higher than the second
bid of S$382m. The bid works out to S$2,014 psf GFA.

Low net yield est at 4.5% - 5%, vs current retail cap rates of 5.5% to 6%.
The mall, which is part of a larger 40-storey development that includes two
blocks of HDB flats and a bus interchange, comprises two basement levels
and five levels above ground with a maximum net floor area of 193,752 sf.
HDB will build the core structure and façade, and will hand over to the
winning bidder around Aug 2010. The estimated cost of fit-out is around
S$50m. This raises the cost further and works out to S$3,055 psf NLA, which
is high compared to valuations of other suburban retail malls, ranging from
c.S$1,700 to S$2,350 psf. Assuming an estimated gross monthly rental of
S$15-16 psf pm, the net yield works out to about 4.5% - 5%, versus current
retail cap rates of 5.5% - 6%.

Attracted by the potential and revenue sources. Notwithstanding the price,
we believe the mall is well located within the town centre, connected to
bus interchanges/MRT station and has a good catchment area with 91k
residents and 65k students in the vicinity. Furthermore, we believe SPH has
been aggressive in looking for additional sources of revenue as Sky@Eleven
contribution ceases in 2010. Funding, in our view, could be via its
internal resources.

Downgrade to Hold, TP: S$4.00. We believe share price could be affected in
the near term as the market will view this piece of news negatively given
that: (i) SPH seems to have been overly aggressive; (ii) there will be a
higher risk profile attached on its foray into a higher risk project
vis-à-vis the stable print business; and (iii) lower prospects of special
dividends in FY10 when Sky@Eleven is completed, a catalyst the market was
looking for previously. Our revised TP of S$4.00 is based on a 5% discount
to our sum-of-parts RNAV.

Is this the latest research from DBSS? I read it yesterday but with different recommendation on TP leh!

Singapore Traders Spectrum

Wired Daily

DBS Group Research . Equity 11 November 2009

Downgrade SPH to HOLD – overpaying for Clementi Mall

SPH’s JV put in a bid of S$542m for Clementi Mall, 42%

above second bidder.  This is costly at c. S$3,055 psf NLA, vs

other bids and latest valuation of other suburban retail malls.

Downgrade SPH to Hold; TP: S$3.79 (Prev S$ 4.22).

MISinformation is the GREATEST RISK in INvestment....

American SUB-prime was rooted in CINE....

Complacency; Incompetence; Negligence; Exuberance



OVERbid is CINE....

We estimate that Clementi Mall could contribute $9.8m to SPH’s net profit upon completion based on gross rent of $10 psfpm (net property yield of 4.0%). The stock is oversold in our view, and continues to see value at 13.5x PER. The fear of a shift in risk profile is unwarranted as the resilience of a suburban mall enhances income stability. Maintain Buy. Previous Day Closing price: $3.74 Recommendation: BUY (maintained) Target price: $4.43 (downgraded from $4.50) SPH (SPH SP): Market over-reacted to Clementi Mall deal. Target price slightlyreduced to $4.43. Maintain Buy.

That was a bit way off the mark!  It shows how much SPH management had lost touch with the market.  Keppel bidded 8.5% more than F&N, while the SPH team generously offered a price that was 42% higher than the second highest bidder.

Overpaying $160 million - that was equivalent to 38% of SPH's net profit for the whole year!  And they boasted so much about management's ability in cutting staff cost?

Hi Marubozu1688,

Sorry my comment could  make u hot. Sorry about that. i should not post it.

U r not bear, u r mad

LOL

I am a bear! Hope to see SPH retraces back to $3.31!

http://mystocksinvesting.blogspot.com/2009/11/sph-broke-critical-support-lines.html