Bonvest

[gautam]

Bonvest is another deep valued stock for those with mid-long time frame investors.

Its crown jewels are sheraton towers and liat towers, both of them are in the super prime area near/around orchard road, are freehold and both of them could be redeveloped in time to come.

Book value is 1.8, but could be higher in view of the redevelopment potential. However, it is thinly traded at around 1.15 and yield is a mere 1-2%pa which might not be enough to pacify most investors.

BONVEST ASSETS

Liat Tower area = 38,000 sq ft.
Plot ratio = 6.1
Area = 231,800 sq ft. per plot ratio

Sheraton Tower area = 76,000 sq ft.
Plot ratio = 4.2
Area = 319,200 sq ft. per plot ratio

Liat Tower & Sheraton Tower area = 551,000 sq ft. per plot ratio

Bonvest assets include 3 oversea hotels, a few shops and retail outlets.


thus, margin of safety is more or less assured in this stock.

I see little downside at the current price.

Possibly, the only thing is whether investors have the patience to wait for the value to be unlocked.

[cfa]

Hardly can expect Indo management sharing wealth with minority shareholders.

[opmi]

If not sharing now, how they expect to share in future?

[specuvestor]

why and what is the catalyst that they should "share" in the first place?

[sgd]

I don't like debt, to me value company means no debt and very high profit & low share price. They look like they have quite a lot of debt and very low profit and very high share price.

debt > 100 million
share price > $1
Q2 net profit ~ 2.9 mil (absence of property reval)

Low profit company are a lot out there, good times like now they will make money but bad times profit will be reduced to potatoes or all spill red ink.

Unlock must have "greed factor" usually that happens when share price dives deep below nav and reach distressed levels that the owners feel is a good value to "them" to delist. Now $1 no greed factor

if you like company that use debt to finance growth there are other property counters on sgx like that use a lot of debt but have much higher net profit and a cheaper share price too.

[lonewolf]

I think the financial summary will provide a little bit more insight into the company.

[Image: Bonvest-Summary_zps8986ae85.jpg]

Segment information from 2012 Annual reports:
[Image: Bonvest_5yr-02_zps08b67941.jpg]

The debt for the company has really ballooned in the last 2FYs and its net cash has been dropping. One thing I dun have the space to show above was the free cash flow. It was positive from FY 2004 to FY 2009 but was negative for the last 3FYs.

I dun know why but I get the feeling like the company never really lived up to its full potential and seems to be mucking around a bit since GFC. I remained vested for now and will see how it goes.

[Drizzt]

I think the financial summary will provide a little bit more insight into the company.

[Image: Bonvest-Summary_zps8986ae85.jpg]

Segment information from 2012 Annual reports:
[Image: Bonvest_5yr-02_zps08b67941.jpg]

The debt for the company has really ballooned in the last 2FYs and its net cash has been dropping. One thing I dun have the space to show above was the free cash flow. It was positive from FY 2004 to FY 2009 but was negative for the last 3FYs.

I dun know why but I get the feeling like the company never really lived up to its full potential and seems to be mucking around a bit since GFC. I remained vested for now and will see how it goes.

bro lonewolf, was looking at this a long time back but drop it off. thanks for sharing this with us so that we can make better decision. appreciate it.

[lonewolf]

bro lonewolf, was looking at this a long time back but drop it off. thanks for sharing this with us so that we can make better decision. appreciate it.

You're welcome. And I think you dodge a bullet there.

I think Bonvest is good example of a company that on paper looks undervalued becos of its attractive assets. But I think its clear that having the assets alone does not make it a good company to own.

Liat Tower is in a prime location but what has Bonvest do to enhance its value all these yrs? Absolutely nothing. Why?? Who knows? But in this sense it remind me of CK Tang which own a prime location but has zero interest in unlocking value or maxisming its potential. cfa is probably more spot on the probable reason.

So I think we need to be more discerning when it comes to valuing companies. Just because it own a few choice properties does not mean its undervalued. So we need to be careful with our assessment.

[gautam]

Hi lonewolf,

Thanks for the useful input.

Thats the trouble with undervalued asser laden companies with a main controlling stakeholder.
Little incentive for unlocking the value. Moreover, unlock or not, he still controls it.
I remember yr back when i was vested in hongfok, at 40c plus drawn to fact thar i was getting a dollar value per share. I sold it off at 60c as i couldnt figure when the orchard site wld be redev, coupled with low and uncertain incentives for small shareholders to hold on to.its shares. And cheong family still paid themselves millions yr after yr. I think these are value traps.

[valueinvestor]

I am vested in St****** and could be biased.
Share price of this company is in deep discount to RNAV and the management is always on the lookout to unlock its values.