Evaluating the Disposal Announcement by Wee Hur.

 Wee Hur announced that it will be disposing a huge proportion of their stake in the Australia PBSA. The deal values the student properties at A$1.6B which is what was mentioned in the media previously.

No surprises there.

Details of the disposal in brief

-Proceeds of S$320 million or 34.8 cents SGD

-Record a gain of 9 cents SGD

-13% stake retained

-Deal expected to complete sometime in 2025

Is this a good deal based on the current price of 0.475?

Current Price indicates a market cap of 436.64 million

13% of A1.6 billion would be 178.1 million SGD (Student Accomodation)

2H 2024 Profits of Australia PBSA (Estimated around 12M, based on rental revisions and operating profit of $20.6 million in 2023)

117 million of spare cash

95m of receivables

Workers Dormitory (26M Profit in 1H 2024 but only 60% stake so 15.6M)

Bartley Vue Development (TOP 2026)

Since total liabilities is around 320 million as well, this means a clean sweep of the balance sheet to no liablities.

Doing a simple calculation

436.34 million -117 million (cash) - 70 million (discounted receivables) - 12 millions (PBSA Profit) - 178.1 million (Stake in PBSA)

= 59.24 million

This is the current value of the workers dormitory + the Bartley Vue Development which is definitely a big discount.

Assume a low 8% net profit on proceeds of Bartley Vue = 15.76 million. 75% interest = 11.82 million

The 15744 bed dormitory runs till 2026

The 10500 domitory runs till 2029. Expected to be fully operational from 2025

Both have 60% stake.

Estimating around 16m of Profit for each half for the 15744 bed. Till 2026 this brings in around 80M

The 10500 bed will bring in around 106 million until 2029.

Assuming no extension is provided (it was granted in 2023)

The undiscounted value is around 200 million already compared to current valuation of 59 million

Not to forget the australia land, construction,fund management(45 million) , alternative investment (13 million) are free.

Realistically speaking. I think the company should be worth around 0.75 at least.

We would see what the market thinks of this deal. I think the PBSA Profits in 2H might be decent as well (exceed 12 million estimations).

In the long run, whether this deal goes through or not, it at least ascertains the value of the PBSA.

Forgot to add that their 30% owned PBSA Y Suites on Margaret in Sydney is not included in this deal. As of 31 December 2023, it was valued at 90 SGD Million. As such, it is another 27 million to Wee Hur. Roughly 2.9 cents per share worth. This PBSA will only come into operation in 2025. Given the positive revisions seen in 2024, it is likely that it is worth more than this figure already.

Late Night Sudden Short Thoughts on My Portfolio

Boring Post Ahead

Using stockscafe, it has been a convenient way for me to see the different statistics provided.

One of the recent table that i have seen was pretty alarming for me although i do feel that it probably is true

In short these past 3 years, i have not been able to inject capital into the portfolio.

Realistically when i see this stat, the first thought that came to my mind was actually how much this amount actually relates to the portfolio in terms of %.

To give an example in portfolio management, if the amount you can inject is 20k while your portfolio is 200k. you are injecting less then 10%. This means that what is in your portfolio is probably more important than what you do with that 20k.

Of course if you only have 5k and you want to inject 20k then these 20k is more important

I guess most folks would know this. Then the question becomes, instead of thinking what new things to buy with these 20k, would it be better to think about how the 200k should be positioned first?

This only applies for mostly stock picking.....if its index purchases and just reaping market returns and volatility then it does not matter much.

This is where opportunity cost probably steps in. However this topic of opportunity cost might get too complex and boring.

1) It depends on how many stocks you have researched, what are your odds of them performing well, how confident you are

2) Versus the current stocks you hold, their outlook based on your research, how much your research is relevant.

To cite a recent example, Powermatic Data is a stock i have talked about often. But i usually say the same thing that i say in telegram.....is a stock that i would recommend my parents to hold but i would not hold it myself.

The holding period for this company to show potential returns is too long (2026). As such, the opportunity cost is probably too large for someone like myself who sees it as being impt. But for e.g my parents would not bother such things so they can have a longer holding period so its totally ok as the balance sheet is still solid.

Of course there is every chance i pick another stock and it does badly while powermatic starts to show value earlier and it makes me look like a big miss but that's stock investing and such things might happens anyway. 

Secondly i think there is always the talk about what are your returns .

I think everyone has different risk appetite, different ways of viewing investing so as long as 1 is happy with their returns based on their way of doing things then all is good. But if u are not happy with your own returns then perhaps a change of way of doing things is probably required.

For example , you cannot be putting your money in t-bills and thinking you will get 10% a year.

Another example is 33.1% returns made over 3 years can be seen in 2 ways

a) Year 1: 0%, Year 2: 0% , Year 3: 33.1%

b) Year 1: 10%. Year 2: 10%, Year 3: 10%

People can talk until the cows come home whether a or b is better but end of the day it really depends on how much you inject into the stock/portfolio 

Someone who keeps putting in money each year will be better off with (a), someone with a lot in the portfolio already and cannot put as much money in will prefer (b)

Conclusion: Sometimes it is not about whether this company has good cash flow, good balance sheet, good income statement, good prospect that really results in a buy. Opportunity Cost might be a good consideration as well to think about.

But of course if the strategy is just to scatter as many stocks and hope that you pick more good ones than bad ones then opportunity cost might not matter....but still i guess there is a need to have some effort to keep track of the business prospect of the various stocks...at least for me thats how i think of it.

Sharing a photo taken which was part of the concert package in one of the concerts i went this year 😂