2nd Chance Properties

[newyorkcityboy]

Possible reasons for bullishness:
1) Believe Fidelity is now on the register.
2) There is a possibility of an extra 2 months of dividend when results are announced. So investors would get 14 months worth of dividend because of the push out of the FYE. So this FYE covers 2 Hari Rayas - periods of booming business. If true, this drives the high yield even higher!
3) In a low yield world, 2nd Chance is a great place to park monies.

[KopiKat]

yesterday (3 sep), 2nd chance made another round of stock repurchase. 678K shares were repurchased.

this morning, a total of 15mil shares have been traded. i have not seen 2nd chance being so active in quite awhile. it will be interesting to see if it's caused by the repurchased or some institutional investor

I'm betting that it's their Shares Buy-Back. As of yesterday, total Buy Back = 20,471,000 (4.35%). With a mandate of 10%, Bal = 26.588Mil more shares. The mandate also allows for a max. price of 105% of Average Closing Price of 5 mkt days, which I calculate to be $0.4116. So, if my guess is correct, the cap today for their Share Buy Back ought to be 41ct.

The picture will be clearer after mkt close.

PS. IIRC, for Shares Buy-Back, they may have to cease for a 30-days period before their 1H or FY results announcement, which ought to be very soon.

Out of ~16 mils share transacted today, only half a mils share is bought back by company, the rest is by other market players.

Wow, suddenly it capture the interest of major market players, who have more optimistic view than the management. The share bought-back by company is always stay below $0.40, but lots of transaction today with price above $0.40

Yup! I'm glad I was wrong! Else, the mgmt would lose some credibility with me... Just for ref, today's Shares Buy Back was done at $0.395 for 551 lots.

If today's actions are due to Funds eg. Fidelity (as pointed out by newyorkcityboy), then Volume ought to drop back to normal within the week? Ditto for prices, unless it continue to generate new market interest and attention..

[mrEngineer]

Hi KopiKat,

I saw your interest in 2nd chance but I cant really figure out yet what's good about it. The way I look at the warrants is that the main shareholder Mohamed Salleh trying to suck money out from the company by converting the bonus warrants he have at 32c and using company funds to buy back at 40c. Net profit have fallen 40% (or 15% wo gains on fair value) for FY2012 and except for the confirmed dividend 3.3c announced, there seems to be no catalyst except the speculation for additional 2 months dividend. Unless there is any chance of special dividend which looks unlikely due to profit drop though cashflow can strongly sustain the dividend.

[Nick]

I don't think there was any adverse effect on their core profits in FY 2012. Looking at their core PBT, they generated $17.287 million in FY 2012 and $15.800 million in FY 2012 implying an increase of 9.4%. The fact that they booked in income tax credit in FY 2011 and income tax expense in FY 2012 may cause its NPAT to be relatively skewed.

EDIT: I noticed they booked in $0.8 million gains on disposal in FY 2012 and $0.4 mil gains in FY 2011 so the core PBT has grown in mid single digits level.

(Not Vested)

[CityFarmer]

The vision statement of the company is

"To be a billion dollar company in market capitalization by 2022 by focusing on real estate activities"

It seem that $0.40 is the magic market price that the company is targeting. In order to achieve billion dollar capitalization, the company total outstanding shares have to grow from current 560 mils to 2.5 bils shares in 10 years.

Instead of appreciating in share's market price, the management is increasing the total outstanding shares. It is done by rewarding bonus share and warrants to their shareholder.

Bonus share and warrants will improve the liquidity and allow regular injection of capital into the company to support the growth.

[KopiKat]

The way I look at the warrants is that the main shareholder Mohamed Salleh trying to suck money out from the company by converting the bonus warrants he have at 32c and using company funds to buy back at 40c.

That was something that crossed my mind yesterday when the Volume hit 16Mil and a high of $0.415. I shared my computations for their Shares Buy Back Price and Volume limit and I didn't feel very good about it. I sold off my entire stake, to be safe, rather than sorry....I'm glad I was wrong and will consider to buy back again...

Net profit have fallen 40% (or 15% wo gains on fair value) for FY2012

The Gain from Valuations for FY11 was a lot higher at $13.527Mil. If we were to strip out the Gain from Valuations for the past years, Profit after Tax were,

FP12 = $20.12M
FY11 = $17.77M
FY10 = $15.04M
FY09 = $16.13M

Note : My figures may not tally exactly as I'd compiled using the segmental data (Apparel, Gold, property, Securities). Have to check again in detail when I'm freer but it does give a quick picture of the earnings.

Reference from AR2011,

[Image: a1tzx2.jpg]

[Image: slmblh.jpg]

and except for the confirmed dividend 3.3c announced, there seems to be no catalyst except the speculation for additional 2 months dividend.

Their Div Guidance during Q3 (Jun) was for 3.3ct, I doubt that there'll be any additional 2mths prorated div. The extension of FY from June to August was already announced 1 year back, so, I'd expect that when they gave the guidance in Q3, they'd have factored that in. I have also previously posted that the number of shares is a lot higher this year due to exercise of Wrt13 @ 32ct, so, I was actually quite surprised they guided for a DPS = 3.3ct (ever after factoring in a 14-mth period).

[CityFarmer]

The Gain from Valuations for FY11 was a lot higher at $13.527Mil. If we were to strip out the Gain from Valuations for the past years, Profit after Tax were,

FP12 = $20.12M
FY11 = $17.77M
FY10 = $15.04M
FY09 = $16.13M

Note : My figures may not tally exactly as I'd compiled using the segmental data (Apparel, Gold, property, Securities). Have to check again in detail when I'm freer but it does give a quick picture of the earnings.

Let's look from the OCF in the last 5 years

FY2012 : 12.7 mils
FY2011 : 12.0 mils
FY2010 : 12.0 mils (with tax credit, if w/o 10.5 mils)
FY2009 : 9.5 mils
FY2008 : 9.2 mils

The OCF is on consistently up-trend.

Their Div Guidance during Q3 (Jun) was for 3.3ct, I doubt that there'll be any additional 2mths prorated div. The extension of FY from June to August was already announced 1 year back, so, I'd expect that when they gave the guidance in Q3, they'd have factored that in. I have also previously posted that the number of shares is a lot higher this year due to exercise of Wrt13 @ 32ct, so, I was actually quite surprised they guided for a DPS = 3.3ct (ever after factoring in a 14-mth period).

Let's see the outcome, it will be released soon.

[mrEngineer]

Seems like everyone is getting different profit numbers. I will need to check PBT and Net profit figures again

[CityFarmer]

Seems like everyone is getting different profit numbers. I will need to check PBT and Net profit figures again

There is different numbers used, but had shown the similar up trend.

I am using OCF, while KopiKat uses PAT ex-fair value gain(loss), and Nick refer to core PBT

For illustration of trend for cash flow, we should also look at the OCF (with minimum Capex)

[KopiKat]

Seems like everyone is getting different profit numbers. I will need to check PBT and Net profit figures again

There is different numbers used, but had shown the similar up trend.

I am using OCF, while KopiKat uses PAT ex-fair value gain(loss), and Nick refer to core PBT

For illustration of trend for cash flow, we should also look at the OCF (with minimum Capex)

Ya, take it as we were looking at 3 pieces of a jig-saw puzzle. Put them together, and the picture gets a bit more clearer...

More from their AR2011,

[Image: 2ds7d4.jpg]

But, need to remove the Fair Value Gain from Properties to get a better picture of the segmental contributions.

[Image: 28h3cph.jpg]

Since Properties contributes the most to the bottomline, it may be a good idea to go take a walk at Sim Lim Square + City Plaza to see whether the bulk of their retail shops are rented out to good tenants... Can go check all if very free... Plus, of course their Gold Shop and First Lady Shops. See extracts from AR2011 FAQ for more info,


8. I understand that Tanjong Katong Complex will be demolished for redevelopment. Will it affect our retail businesses there?

The tenants of Tanjong Katong Complex have been informed to vacate the premises on or before 31st December 2012.

Almost all of our retail profits in Singapore comes from the two First Lady shops and one gold shop in Tanjong Katong Complex. In anticipation of the redevelopment plans for Tanjong Katong Complex, we have already opened a First Lady outlet in City Plaza and the other First Lady store and our gold business will be opened there in due time. As City Plaza is located diagonally across Tanjong Katong Complex, we do not anticipate any major disruptions to our retail businesses.

* It was announced in August 2011 that the Government have decided to allow tenants of Tanjong Katong Complex to continue doing business for another 10 years.