Monday, January 10, 2011

Tai Sang Land purchased #3

On Friday I made a further purchase of shares in Tai Sang Land (HK:89) paying HK$3.70 per share. As mentioned in earlier posts on this company, I am buying largely on the basis of the steep discount to NAV.


Andy said...

Yield looks good too.

Andy said...

But what do you think distinguishes Tai Sang from all the other small HK developers with high discount to NAV?

traineeinvestor said...

Hi Andy

There are a number of others out there. I also own Tai Cheung (HK:88) which, although about 4x the size of Tai Sang, is still relatively small. A couple of others I looked at had even less liquidity.

I simply haven't had time to research all of them in sufficient detail (the down side of having a full time job and two young children). If there are any you think may be interesting, let me know and I'll take a look.


JD said...

Could you have a look into K Wah 173 and Wing Tai 369? both are at deep discount to NAV and div yield 2 to 3%.

traineeinvestor said...


I've had a look at Wing Tai (369). The discount to NAV is considerable and is superficially attractive. However there are some things which I have reservations about. In addition, there would need to be some catalyst to close the gap between the share price and the NAV per share.

Some random comments:

1. they have a loss making apparel business. If they shut this down, that would provide a modest boost to profits and give me more confidence that management is focused on the core business;

2. when I read the last annual and interim reports, I was often uncertain as to which assets are held in Winsor and which were held directly. I also note that a lot (all?) of the current development projects are small minorty interests (this is common for the smaller developers) and some are in the PRC;

3. the December 2009 capital raising was done by way of a rights issue rather than the frustratingly typical value destroying placing - this is a positive;

4. management have a material interest in the company;

5. my first read did not tell me whether the NAV was based on the share price of Winsor or the value of Winsor's assets. I suspect the latter, in which case I would downgrade the discount to NAV per share accordingly. I'd need to crunch the numbers in more detail to get a "real" NAV number;

6. gearing was just over 40% as at the half year balance date;

7. I have no idea whether recurring rental income will rise or fall in the short term - whether increases in rent levels and occupancy rates in continuing properties will offset the loss of rental income from the industrial properties which were sold;

8. the yield is low.This is irrelevant to total returns and, as long as the company has meangingful debt levels, I'd rather they held on to their cash.

I didn't do a full analysis but would tentatively describe this as a potentially good value NAV investment with a few "buts" attached to it.

I looked at Ka Wah (173) a couple of years ago. IIRC the debt levels were a bit higher than I was comfortable with. I'll take another look but may not get to it until the weekend.

traineeinvestor said...


I finally got around to looking at K Wah (173) and decided the combination of deep discount to NAV and expectation that the company will be able to close the discount as completed developments are sold was enough to justify a purchase. The holding yield of 3.4% while not spectacular is good enough income to receive while waiting for the NAV discount to shrink a bit.