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Investor CentralBBR Holdings (S) Ltd - MANAGEMENT REPLY: Did HDB trim Tenteram Peak project at the last minute?
3/4/2013 – BBR Holdings (S) Ltd has won a fifth order from the HDB, this time a S$102.8 mln contract to build 755 flats in the Kallang Whampoa area in Singapore.
According to the company’s announcement, the contract is for two 31-storey and two 32-storey HDB Blocks, among other item.
BBR Holdings’ order book stands at S$1.12 bln as on March 25, 2013.
Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.
1. Is the latest order win about HDB’s Tenteram Peak project?
We are almost certain that the contract is for Tenteram Peak, the only built-to-order (BTO) project awarded by HDB in Kallang Whampoa area since September 2012.
We couldn’t find any other project recently awarded by HDB in Kallang Whampoa area.
Also, the description of the property in company’s announcement is somewhat similar to Tenteram Peak’s description on HDB’s website.
Still, can you please confirm if S$102.8 mln contract is about Tenteram Peak project?
Management ReplyYes.
2. How did discrepancies in the project arise?
Assuming that’s the case, we were surprised to see a few discrepancies in the claims of BBR Holdings and those posted on HDB’s website.
First, HDB’s website describes Tenteram Peak as 755 units over two 30-storey and two 31-storey residential blocks.
Interestingly, this is different from BBR Holdings’ description of 31-storey and 32-storey blocks.
Has HDB really trimmed the height of the blocks to 30-storey and 31-storey, as claimed in BBR Holdings’ announcement?
In another instance, BBR Holdings claims the development work has started and is scheduled for completion by April 2016.
But HDB’s website estimates the project would be completed in Q4 2016.
And, has HDB shifted the project completion deadline from Q4 2016 to April 2016, as targeted by BBR Holdings?
Management ReplyWe wish to apologise for the typo errors, it should have been two 30-storey and two 31-storey blocks.
Our contract period stipulated in HDB’s letter of award is up to April 2016.
3. Why doesn’t its order book add up?
According to its March 25 announcement, BBR Holdings’ order book stood at S$1.12 bln.
Just three weeks before this announcement, on March 4, the company announced S$61.6 mln worth of new orders won between November 2012 and January 2013, bringing its order book to S$1.02 bln.
And another few days before that, on February 22, BBR Holdings announced its order book was S$960 mln (refer page 12 of FY2012 earnings announcement).
We are wondering why the company announced order wins from November 2012 to January 2013only on March 4, when it actually updated the market with different numbers on February 22.
It is difficult for investors to make heads or tails of these numbers.
Management ReplyThe order book as at 22.2.13 does not include the $61.6 mil announced on 4.3.13. BBR decided to delay the announcement for projects secured from Nov 12 to Jan 13 due to our FY12 results announcement on 22.2.13, followed by the Singapore Budget 2013.
Order book as at 22.2.13 - $960 mln
Add : projects announced 4.3.13 - $61.6 mln
Add : Kallang Whampoa 25.3.13 - $103 mln
Order book as at 25.3.13 - $1124.6 mln i.e. approx $1.12 bln
We thank the management for the replies.
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Key financial ratios
The ticks and crosses below indicate whether the stock meets the following value investing criteria.
Price-book: 0.87x - "Price is what you pay, value is what you get" - Are you getting more than you pay for?
Yield: 2.91% - Does the stock pay a risk premium over fixed deposit rates?
Cashflow: S$55.3 mln - "Profit is opinion, cash is fact" - Is the company generating cash?
Total cash & equivalents: S$47.8 mln - Does the company have cash?
Source: Reuters
Management: BBR Holdings (S) Ltd was ranked 177th in the Governance & Transparency Index, with a score of 39 points.
Major shareholder(s):
27.78% - BBR Holding Ltd
5.54% - Tan (Kheng Hwee Andrew)
1.58% - Ong (Kian Kok)
Consensus call:Not Covered
Price target: Not Covered
Sources & further information
March 25, 2013 order win announcement
March 4, 2013 order win announcement
2012 earnings report - February 22, 2013 announcement
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