Tuan Sing, uncovering the undervalued prime property developer plus others. $0.25

This will probably the penultimate post from me for the year as next couple of weekends will be rather busy due to Christmas and New Year celebrations scheduled. It is my favorite time of the year because this is the time to look forward to the new beginning for another year and my investment track record starts on a clean slate once again. December is always a great month to reflect back on the year and strategize for the next year. This year has not been fantastic especially for equity investors because they had to go through two volatile periods in May and September wiping out most gains and only giving them back if the investor was able to withstand the temptation to cut losses.

Before I go into the topic for today, I would like to apologise for not posting last weekend because if I did, some of you would have made good money on the stock I was going to write about. For those who benefited from the call, you are welcome. But anyone of you who smses me asking for contra or trading ideas, I will be charging 20% performance fee should you make money. I do not appreciate being asked such questions because I really dislike giving advice on short term trades, I do not like to have the pressure of giving a stock pick that will perform over 5 days. So let me state this clearly once and for all, NO MORE CONTRA advice! It is ok if you want me to give you ideas on stocks to buy and hold, because that is what investing is all about!

The stock I was intending to write about was STX OSV which has already gone up significantly from the price I was intending to call for. This is probably the IPO I liked most out of all the recent IPOs. I do believe it will continue to do well over the long term so do keep this on your watch lists and look for an attractive entry price. Goldman released a good report placing a target price of $1.54 on it. It is not surprising for Goldman to write good things for this stock because they are after all they are the IPO manager. Expect more positive reports to be released and more investors will jump on the bandwagon because there will be more credibility from a more neutral party.

This week, I am going to be doing a write up on a stock which my mum and dad would know about but younger investors would not even bother about it. This is a favor I am doing for someone who asked me to look into this stock. After looking through it, I was definitely impressed by the value in this company that is why I have decided to share it with all of you. Remember, this is definitely not the kind of stock that will move over the next few weeks or even months but this is one that has tons of value and will eventually deliver.

Tuan Sing Holdings Limited was established in 1969 and listed on the Singapore Stock Exchange in 1973. Over the years, the Company has expanded into multi-core businesses and broadened its presence in the region. Headquartered in Singapore, Tuan Sing now has over 70 subsidiaries, associated and jointly-controlled companies with a total workforce of more than 4,200 employees operating in various countries in the region.

Tuan Sing is involved in industrial manufacturing (tyres, packaging etc), hotel operations, property development, retail and electronics manufacturing. Now you know how diversified this company is. Currently, the company seems focused on taking on more property development projects, through their acquisition of Serene House and the land plot in Seletar. Earnings over the past year has been driven by property development while revenue has improved due to industrial segment.

Property Development

The company has been involved with property development for the longest time in Singapore and they have plenty of experience with that in China too. All their previous developments have been in prime areas in Shanghai. Their historical selection of land plots for development have been impressive and I do expect them to continue this great track record of land selection going forward.

Industrial Manufacturing

The Tyre and Auto Products unit has exclusive distributorship/rights for tyres from renowned manufacturers, namely GT Radial and Bias Tyres from Indonesia; GT Radial, Primewell and Runway Tyres from GiTi Group in China.

As the exclusive distributor for these established brands of tyre for selected countries in ASEAN, the unit distributes a wide range of tyres including passenger car radial tyres, truck and bus bias and radial tyres, as well as off-the road and industrial tyres. To complement its tyre business, the unit also markets Millennium wheels from Indonesia, GT wheels of Seyen Heavy Industryies in China, GT Lube, GT Batt and Yokohama brand batteries in ASEAN and China.

Hypak, a 98%-owned subsidiary, manufactures unlaminated and laminated polypropylene woven bags for products such as fertiliser, sugar, chemical, flour and feed meal.

Hotel operations (Hyatt Melbourne and Hyatt Regency Perth)


Hyatt Melbourne is a pre-eminent five star hotel in Melbourne

Within walking distance to the city's premier theatre, sporting venues, parks and convention centres

Won many international awards including recognition as Best Business Hotel in Melbourne 2000 by Asiamoney and Euromoney

547 guest rooms including 49 suites

Regency Club with 56 guest rooms for VIP accommodation

Hyatt Regency Perth includes five star Hyatt Regency Hotel, 23,000 square metres of office, retail and professional office tenancies, and a basement carpark

367 guest rooms including 32 suites

Regency Club with 68 guest rooms for VIP accommodation

Retail

The Group’s retail business comprises its 60% interest in the Pan-West group of companies, held through the Group’s wholly-owned subsidiary TS Planet Sports Pte Ltd.

Pan-West distributes and markets golf and golf-related lifestyle products in Singapore, Malaysia, and Indonesia. It also provides golf-related services such as custom fitting, professional coaching and after sales service. As a retailer, Pan-West operates 35 on-course and off-course outlets and concessionaires throughout the region.

Pan-West is the distributor of some of the top golfing brands in the world, amongst them, Callaway, Honma, Odyssey, Cleveland, Yamaha, Tour Edge, Cutter & Buck and Katana.

Electronics Manufacturing

Tuan Sing owns a 43.33% interest in an associated company, publicly listed Gul Technologies Singapore Ltd, a printed circuit board manufacturer with operations in Singapore and China.

GulTech is a manufacturer of double-sided, multi-layered and high-density printed circuit boards (PCBs). The company was listed on SESDAQ in March 1997 and was transferred to the main board of SGX in July 2000. GulTech has manufacturing plants in Suzhou and Wuxi, China.

Now you get the idea. When a company has this many businesses, it is hard for analysts to cover, hard for investors to appreciate and hard for the management to manage efficiently. I strongly believe this is a key reason why the stock price is still languishing at these levels.

The company used to be bogged down by high gearing in the past but after restructuring and divestment of Katong Mall, they have brought themselves to a net cash position and more corporate restructuring seems to be on the cards from the company's latest result announcement.With the current price at $0.25, the company is trading at less than 10 times p/e with a NAV of $0.45. With their recent moves in replenishing their land bank in Singapore and China, expect analysts to start paying attention to Tuan Sing, putting this company onto the radar screens of investors.

For me, I really think Tuan Sing will continue to be underrated as long as it continues having such diversified businesses. However, I do think the company is going to restructure itself to focus more on its core business (property development and their tyre business) and probably hive off or spin off most of its other businesses. If they should do this, I really believe investors will open up their eyes and see the company in a different light. A target price of $0.36 is not unreasonable which translates to 20% to its NAV. So I would call this a strong buy for all value investors.

In my next post, I hope to cover my views on the market for next year. Pray hard I will be sober enough to write.

Have a great week ahead.

Best,

SVI