Monday, 21 May 2012

My thoughts on Stamford Land Corp.

Stamford Land Corp.

This company is my largest holding to date, which I acquired at S$0.50.

Qualitative Analysis:
-Family owned ~ 35%

-Willing to pay dividends regularly over the years

-Good track record of owner unlocking value in stable of companies like SG Shipping/Cougar Logistics

-Owner is a reputable businessman

-Unlocking of value might take indefinite years (opportunity costs)

-No visible catalyst moving forward

-Hospitality is a cyclical industry, though the shortage of rooms in Australia might mitigate the magnitude of falls in revenue.

Quantitative Analysis
(based on my estimation using financial statem data @ A$1 = S$1.25):

Cost of Hotel Portfolio: S$488m
Probable mkt price of Hotel Portfolio: ~S$768m (based on recent offers)

Recurrent Earnings from hotels and Dynons Plaza: ~ S$26m/yr
Projected EPS: ~ S$0.03/yr (based on 864m shares)
Projected sustainable dividend: ~ S$0.02/yr (excludes special dividends)

Note that my above analysis has a combination of assumptions, one of which is the recurring income are performing as per  2009/2010 (year when no ppty was sold)
Assumptions are necessary, and I do believe investing is an art, not a science, to a certain extent.


Projected Dividend Yield is not fantastic @ 3.7%
I am holding it solely for the value of its hotel portfolio.
Its current book value is based on the cost price paid by the company in the 1990s to early 2000s. The market values of the hotels are substantially higher today.

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