Published September 15, 2008
China, Vietnam landbanks may hit developers
By UMA SHANKARI
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AMID the doom and gloom in the local property market, concerns are also beginning to mount about Singapore developers' exposure to the China and Vietnam markets.
Recent news out of China's property market has been grim. Many Chinese developers are reportedly cutting selling prices as the sector feels the heat from previously-introduced government measures to cool the market, coupled with a slowing economy.
CIMB's Hong Kong/China property analyst Alice Chong, for one, believes that while price cuts are not widespread yet, anecdotal evidence suggests that transaction prices have fallen by about 10 per cent so far this year. Going into 2009, she expects another 5-10 per cent decline in prices as the sector enters a correction phase. Regions that she is particularly negative on are Shenzhen, Guangzhou, Beijing and Shanghai.
Vietnam, previously South-east Asia's property darling, could go the same route. Like in China, the government in Vietnam is fighting inflation with various regulatory measures to cool the economy. In line with this, there is a danger of prices heading south.
Singapore developers, who have sharply raised their exposures in the two countries over the past three years, could be hit. Investors here, who have been tracking falling property prices in Singapore closely, should also keep a wary eye on the property markets in China and Vietnam.
CapitaLand, for example, had some 30 per cent of total assets, worth $7.4 billion in all, in China, Macau and Hong Kong in the first half of 2008. The developer has more than 35,000 homes in the pipeline and stakes in over 20 million square feet of net lettable area in office and retail assets in China.
Analysts think that this exposure could prove to be a bugbear for the company in the near term.
Recent reports suggest that the fundamentals in the Chinese property sector are weakening. Construction costs have risen by around 10 per cent year-to-date. As inventory levels continue to rise, developers who deferred sales in the first half of 2008 are coming under pressure to move their units and cut prices.
Kim Eng Research, for one, recently marked down its average selling price (ASP) assumptions for China by 10-15 per cent, and downgraded CapitaLand's stock to a 'hold'. In the same vein, CIMB noted that a 10 per cent fall in residential selling prices will result in a 2 per cent fall in its revalued net asset value (RNAV) estimate for CapitaLand.
A weakening economy is also putting pressure on capital value estimates for CapitaLand's commercial and retail properties. 'Assuming the market values for all asset classes are scaled back by 10 per cent, we estimate that CapitaLand's RNAV will fall by around 3.5 per cent,' CIMB noted in a report.
In the same vein, Keppel Land is also similarly facing rising short-term operating risks in China and Vietnam.
About 17 per cent of KepLand's total assets were invested in China as at end-June 2008. The developer also revealed in July - in a bid to reassure investors about the situation in Vietnam - that some $360 million, or 6.5 per cent, of group's total assets as at the Q1 2008 - were in Vietnam, including office buildings and serviced apartments.
Another developer that is big in both China and Vietnam is Guocoland, which has more than 50 per cent of its assets overseas.
Vietnam is suffering from high inflation and a widening trade deficit, and there are fears of a dong devaluation. A liquidity crunch also means that smaller and non-reputable developers will be forced out of the market.
While Singaporean developers in China and Vietnam are neither small nor disreputable, they will be forced to cut prices if other developers do so.
Right now, none can pinpoint with any certainty where the markets in both countries are heading. But investors should bear in mind that, for several Singapore developers, the dangers could come from outside - even if the property market in Singapore stages some sort of recovery.
Tuesday, 16 September 2008
Sunday, 14 September 2008
Published September 13, 2008
Lehman scrambles to find buyer
Its shares dive further as execs talk to potential suitors and the Fed
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(New York)
LEHMAN Brothers' shares sank further yesterday as top executives raced to put a sale of the beleaguered investment bank in place.
Confidence has waned that Lehman Brothers Holdings will emerge from the financial crisis as an independent franchise, and the No 4 US investment bank is scouring Wall Street for a financial lifeline. Executives worked feverishly in the past 24 hours to find someone willing to buy all or part of the company, bankers and industry executives close to the situation said.
In morning trading, Lehman shares fell 40 cents, or 9.5 per cent, to US$3.82.
That only puts more pressure on Lehman chief executive Richard Fuld, who joined the company in 1961 as a college student and now serves as Wall Street's longest-serving CEO. He has tenaciously resisted putting the company up for sale, but finally relented after a free-fall in its stock price and growing doubts about its survival, according to bankers and industry executives.
Lehman chief executive Richard Fuld has tenaciously resisted putting the company up for sale, but finally relented after a free-fall in its stock price and growing doubts about its survival, according to bankers and industry executives.
Bank of America Corp, Japan's Nomura Securities, France's BNP Paribas, Deutsche Bank and Britain's Barclay's plc have been mentioned this week as potential buyers. Goldman Sachs Group, which also was being talked about as a potential buyer, is not interested, according to an industry official who ask not to be named.
Lehman is also in close contact with both the Treasury department and the Federal Reserve about how to proceed. Government officials, who asked for anonymity because of the sensitivity of the discussions, said that a number of options were being explored and that no decisions had been reached on how any deal involving Lehman would be structured. The Fed and the Treasury have been working to help resolve Lehman's situation. Fed officials are having conversations with relevant parties and getting updates. It's premature to say what form any final resolution would take.
Any resolution is not expected to involve the use of government money which would set it apart from the billions of dollars that the government put at risk to facilitate the sale of Bear Stearns in March and to rescue mortgage giants Fannie Mae and Freddie Mac this week.
Lehman's losses soared to almost US$7 billion in the last two quarters alone, primarily because of wrong-way bets on mortgage securities and other risky investments.
It's not alone. Global banks have lost more than US$300 billion since the sub-prime mortgage crisis spread to the credit markets one year ago. And the International Monetary Fund has suggested total losses globally could hit US$1 trillion.
Lehman Brothers hunted for months for a deep-pocketed investor to pump fresh capital into the firm, a move that would help restore confidence and replenish its broken balance sheet. Some analysts said Lehman was asking too high a price, others guessed that potential investors found too much risk on its books in the current environment. AP
Lehman scrambles to find buyer
Its shares dive further as execs talk to potential suitors and the Fed
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(New York)
LEHMAN Brothers' shares sank further yesterday as top executives raced to put a sale of the beleaguered investment bank in place.
Confidence has waned that Lehman Brothers Holdings will emerge from the financial crisis as an independent franchise, and the No 4 US investment bank is scouring Wall Street for a financial lifeline. Executives worked feverishly in the past 24 hours to find someone willing to buy all or part of the company, bankers and industry executives close to the situation said.
In morning trading, Lehman shares fell 40 cents, or 9.5 per cent, to US$3.82.
That only puts more pressure on Lehman chief executive Richard Fuld, who joined the company in 1961 as a college student and now serves as Wall Street's longest-serving CEO. He has tenaciously resisted putting the company up for sale, but finally relented after a free-fall in its stock price and growing doubts about its survival, according to bankers and industry executives.
Lehman chief executive Richard Fuld has tenaciously resisted putting the company up for sale, but finally relented after a free-fall in its stock price and growing doubts about its survival, according to bankers and industry executives.
Bank of America Corp, Japan's Nomura Securities, France's BNP Paribas, Deutsche Bank and Britain's Barclay's plc have been mentioned this week as potential buyers. Goldman Sachs Group, which also was being talked about as a potential buyer, is not interested, according to an industry official who ask not to be named.
Lehman is also in close contact with both the Treasury department and the Federal Reserve about how to proceed. Government officials, who asked for anonymity because of the sensitivity of the discussions, said that a number of options were being explored and that no decisions had been reached on how any deal involving Lehman would be structured. The Fed and the Treasury have been working to help resolve Lehman's situation. Fed officials are having conversations with relevant parties and getting updates. It's premature to say what form any final resolution would take.
Any resolution is not expected to involve the use of government money which would set it apart from the billions of dollars that the government put at risk to facilitate the sale of Bear Stearns in March and to rescue mortgage giants Fannie Mae and Freddie Mac this week.
Lehman's losses soared to almost US$7 billion in the last two quarters alone, primarily because of wrong-way bets on mortgage securities and other risky investments.
It's not alone. Global banks have lost more than US$300 billion since the sub-prime mortgage crisis spread to the credit markets one year ago. And the International Monetary Fund has suggested total losses globally could hit US$1 trillion.
Lehman Brothers hunted for months for a deep-pocketed investor to pump fresh capital into the firm, a move that would help restore confidence and replenish its broken balance sheet. Some analysts said Lehman was asking too high a price, others guessed that potential investors found too much risk on its books in the current environment. AP
Published September 13, 2008
Remisier kings
The cousins who have taken over Peter Lim's throne
By VEN SREENIVASAN AND JAMIE LEE
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FOR years, the words 'remisier king' and Peter Lim have always appeared in the same sentence. Of late, though, the title has been tweaked. Now, Mr Lim is called 'ex-remisier king'. Reason? The mantle has passed and there is now a new king in town. Or rather two of them.
STAR BROKERS
Known as 'The A-Team' or 'The Dream Team', Mr Loh (left) and Mr Han have made the remisier throne their own over the past five years
Just like their predecessor, who once rewarded each member of his trading team with a Lexus car, the new kings have the golden touch. Other investors watch their moves, and their name, when linked with a particular company or stock, creates a buzz.
UOB Kay Hian's David Loh, 45, and Han Seng Juan, 46, have made the remisier throne their own over the past five years.
Known as 'The A-Team' or 'The Dream Team', these two star brokers are maternal cousins. They struck gold by seizing control of the Chinese IPO space here - and not letting go. As soon as the Singapore Exchange laid out a red carpet for Chinese companies to list here, the two walked right over it.
Asked how many IPOs (initial public offerings) he and his cousin have handled, Mr Loh responded: 'I really can't remember, but probably over 150 in the last couple of years.'
'We invest in these companies prior to their listing to help them grow their businesses and raise their profile. It's also about putting our money where our mouth is. You don't go around telling people to invest while you yourself shy away.'
Mr Han
They are casual kings, too. Managing one entire floor full of traders at UOB Kay Hian, they often show up dressed in T-shirt and jeans - sometimes even shorts.
But their legend is growing by the day and when their firm's brokers meet newbies in the business, they are often accosted with awe-inspired questions about 'David and Han'.
People want to know: What are they like? How do they do deals? Market talk has it that the easy-going cousins have had a hand in nearly three out of every four S-chip listings. And in the process, they are said to have made a fortune which could put them at par with the US$1.1 billion which Forbes magazine reckons Mr Lim is worth.
Stories about their jet-setting lifestyle abound in market circles and there are rumours of them splurging on BMWs for their trading teams.
But in an exclusive and first-ever media interview, the duo insisted stories of their flying around in private jets were hugely exaggerated.
'We generally fly with Singapore Airlines and the last time we checked, we had not bought the airline,' laughed Mr Loh. 'So I'd take all that talk about us jetting everywhere in private jets with a bagful of salt. And no, we haven't bought beemers for our staff, though I'm sure they wish we would.'
Added Mr Han: 'You know how the market has a knack for making some people out to be bigger than they really are. Yes, we have had good times, but we've also gone through some bad ones. But I suppose the success stories sell better.'
Of course, the latest story doing the rounds about them is about how they were fined $5,000 each by the Monetary Authority of Singapore for late declaration of their shareholdings in some three dozen firms. The delays stretched from four days to 44 months. It comes, perhaps, from having their fingers in so many pies.
'There is no doubt this was an oversight on our part, and there is no excuse for it,' said Mr Han. 'But we set up many Special Purpose Vehicles for investments, and have a standard operating procedure within our company for reporting these. Obviously we fell short, and have rectified the reporting process.'
He added that the mistakes arose largely due to oversight and their unfamiliarity with the legal regulatory requirements, and mostly involved investments in private companies. Since then, they have set up compliance teams to ensure against a repeat.
He stressed: 'We have complied with all our SGX disclosure requirements in respect of our investments in listed entities.'
'Our work requires us to spend too much time away from home and our families. But you know, at the end of the day, it is our families which are the centre of our lives.'
Mr Loh
The cousins joined the industry in the late eighties as fresh university graduates. Mr Han started out in UOB Securities, while Mr Loh was at Phillip Securities, and later joined UOB Kay Hian in 1996. Mr Loh then went to Hong Kong to set up the broking firm's office there, while his cousin stayed in Singapore.
It was during this time that they built up relationships with institutional clients and corporates in Hong Kong and China which were to come in so handy later.
The scores of China IPOs they led into Singapore during the boom years sometimes debuted at almost double their offer price. The duo often invested in these companies themselves - a move that no doubt paid off big time.
'We invest in these companies prior to their listing to help them grow their businesses and raise their profile,' explained Mr Han. 'It's also about putting our money where our mouth is. You don't go around telling people to invest while you yourself shy away.'
They continue to invest in new listings, such as recent debutante crocodile skin specialist Heng Long International, through their investment vehicle Centurion Investment Management. And despite the market turbulence and poor IPO sentiment, the duo still see investment opportunities.
'Markets go through cycles, and one has to ride through these cycles and believe in the fundamentals,' Mr Loh said. 'I believe that in a market like this, where valuations have fallen through the floor, there is opportunity to sieve for value.'
But he warns that it will be a rough ride during the near term.
'Cash is still king and don't rush to buy,' he added. 'The market is not going to bounce in a short time. Hold cash and slowly pick up the best medium and long-term deals you can. Go for sizeable companies, with strong earnings stories and good growth potential. We believe Chinese businesses will again play an important role in Singapore IPOs.'
One of their biggest corporate deals was the half a billion dollars they raised for China Hongxing Sports last year, via the placement of the sports shoes and apparel maker's shares at $1.18 each.
They continue to invest and have bought a stake in Trump Dragon Distillers Holdings, maker of a popular rice wine in China, which listed last week through their corporate finance company Boulton Capital Asia. The stock bucked the market's slide on debt to close at 36 cents - up five cents from its IPO price.
The duo have diversified into property over the past year, two of their better known transactions being the purchase of foreign worker dormitories in Jurong for $60 million and snapping up the Kovan site last year for a cool $290 million for a condominium development. For the latter, done through Centurion, they beat back long-established property players such as Far East Organization, Hong Leong Holdings and Frasers Centrepoint. Though they did attract criticism for paying 'too much' for the Kovan Residences site, they contend that they are not concerned with short-term cycles.
They have also started investing in properties in Vietnam and China.
Meanwhile, when they are not entertaining clients and associates at some of the finest restaurants in town or uncorking the most expensive vintages, or cruising around in their Ferraris, or jetting off to some exotic location, the duo spend much of their time with their families.
The proud fathers - Mr Han has one son, while Mr Loh has four children - enjoy holidaying with their families, flying them to various idyllic destinations, including their favourite ski slopes in Japan.
'Our work requires us to spend too much time away from home and our families,' said Mr Loh. 'But you know, at the end of the day, it is our families which are the centre of our lives.'
It is a tough juggling act, no doubt, but the new kings know how to keep the balls in the air.
Remisier kings
The cousins who have taken over Peter Lim's throne
By VEN SREENIVASAN AND JAMIE LEE
Email this article
Print article
Feedback
FOR years, the words 'remisier king' and Peter Lim have always appeared in the same sentence. Of late, though, the title has been tweaked. Now, Mr Lim is called 'ex-remisier king'. Reason? The mantle has passed and there is now a new king in town. Or rather two of them.
STAR BROKERS
Known as 'The A-Team' or 'The Dream Team', Mr Loh (left) and Mr Han have made the remisier throne their own over the past five years
Just like their predecessor, who once rewarded each member of his trading team with a Lexus car, the new kings have the golden touch. Other investors watch their moves, and their name, when linked with a particular company or stock, creates a buzz.
UOB Kay Hian's David Loh, 45, and Han Seng Juan, 46, have made the remisier throne their own over the past five years.
Known as 'The A-Team' or 'The Dream Team', these two star brokers are maternal cousins. They struck gold by seizing control of the Chinese IPO space here - and not letting go. As soon as the Singapore Exchange laid out a red carpet for Chinese companies to list here, the two walked right over it.
Asked how many IPOs (initial public offerings) he and his cousin have handled, Mr Loh responded: 'I really can't remember, but probably over 150 in the last couple of years.'
'We invest in these companies prior to their listing to help them grow their businesses and raise their profile. It's also about putting our money where our mouth is. You don't go around telling people to invest while you yourself shy away.'
Mr Han
They are casual kings, too. Managing one entire floor full of traders at UOB Kay Hian, they often show up dressed in T-shirt and jeans - sometimes even shorts.
But their legend is growing by the day and when their firm's brokers meet newbies in the business, they are often accosted with awe-inspired questions about 'David and Han'.
People want to know: What are they like? How do they do deals? Market talk has it that the easy-going cousins have had a hand in nearly three out of every four S-chip listings. And in the process, they are said to have made a fortune which could put them at par with the US$1.1 billion which Forbes magazine reckons Mr Lim is worth.
Stories about their jet-setting lifestyle abound in market circles and there are rumours of them splurging on BMWs for their trading teams.
But in an exclusive and first-ever media interview, the duo insisted stories of their flying around in private jets were hugely exaggerated.
'We generally fly with Singapore Airlines and the last time we checked, we had not bought the airline,' laughed Mr Loh. 'So I'd take all that talk about us jetting everywhere in private jets with a bagful of salt. And no, we haven't bought beemers for our staff, though I'm sure they wish we would.'
Added Mr Han: 'You know how the market has a knack for making some people out to be bigger than they really are. Yes, we have had good times, but we've also gone through some bad ones. But I suppose the success stories sell better.'
Of course, the latest story doing the rounds about them is about how they were fined $5,000 each by the Monetary Authority of Singapore for late declaration of their shareholdings in some three dozen firms. The delays stretched from four days to 44 months. It comes, perhaps, from having their fingers in so many pies.
'There is no doubt this was an oversight on our part, and there is no excuse for it,' said Mr Han. 'But we set up many Special Purpose Vehicles for investments, and have a standard operating procedure within our company for reporting these. Obviously we fell short, and have rectified the reporting process.'
He added that the mistakes arose largely due to oversight and their unfamiliarity with the legal regulatory requirements, and mostly involved investments in private companies. Since then, they have set up compliance teams to ensure against a repeat.
He stressed: 'We have complied with all our SGX disclosure requirements in respect of our investments in listed entities.'
'Our work requires us to spend too much time away from home and our families. But you know, at the end of the day, it is our families which are the centre of our lives.'
Mr Loh
The cousins joined the industry in the late eighties as fresh university graduates. Mr Han started out in UOB Securities, while Mr Loh was at Phillip Securities, and later joined UOB Kay Hian in 1996. Mr Loh then went to Hong Kong to set up the broking firm's office there, while his cousin stayed in Singapore.
It was during this time that they built up relationships with institutional clients and corporates in Hong Kong and China which were to come in so handy later.
The scores of China IPOs they led into Singapore during the boom years sometimes debuted at almost double their offer price. The duo often invested in these companies themselves - a move that no doubt paid off big time.
'We invest in these companies prior to their listing to help them grow their businesses and raise their profile,' explained Mr Han. 'It's also about putting our money where our mouth is. You don't go around telling people to invest while you yourself shy away.'
They continue to invest in new listings, such as recent debutante crocodile skin specialist Heng Long International, through their investment vehicle Centurion Investment Management. And despite the market turbulence and poor IPO sentiment, the duo still see investment opportunities.
'Markets go through cycles, and one has to ride through these cycles and believe in the fundamentals,' Mr Loh said. 'I believe that in a market like this, where valuations have fallen through the floor, there is opportunity to sieve for value.'
But he warns that it will be a rough ride during the near term.
'Cash is still king and don't rush to buy,' he added. 'The market is not going to bounce in a short time. Hold cash and slowly pick up the best medium and long-term deals you can. Go for sizeable companies, with strong earnings stories and good growth potential. We believe Chinese businesses will again play an important role in Singapore IPOs.'
One of their biggest corporate deals was the half a billion dollars they raised for China Hongxing Sports last year, via the placement of the sports shoes and apparel maker's shares at $1.18 each.
They continue to invest and have bought a stake in Trump Dragon Distillers Holdings, maker of a popular rice wine in China, which listed last week through their corporate finance company Boulton Capital Asia. The stock bucked the market's slide on debt to close at 36 cents - up five cents from its IPO price.
The duo have diversified into property over the past year, two of their better known transactions being the purchase of foreign worker dormitories in Jurong for $60 million and snapping up the Kovan site last year for a cool $290 million for a condominium development. For the latter, done through Centurion, they beat back long-established property players such as Far East Organization, Hong Leong Holdings and Frasers Centrepoint. Though they did attract criticism for paying 'too much' for the Kovan Residences site, they contend that they are not concerned with short-term cycles.
They have also started investing in properties in Vietnam and China.
Meanwhile, when they are not entertaining clients and associates at some of the finest restaurants in town or uncorking the most expensive vintages, or cruising around in their Ferraris, or jetting off to some exotic location, the duo spend much of their time with their families.
The proud fathers - Mr Han has one son, while Mr Loh has four children - enjoy holidaying with their families, flying them to various idyllic destinations, including their favourite ski slopes in Japan.
'Our work requires us to spend too much time away from home and our families,' said Mr Loh. 'But you know, at the end of the day, it is our families which are the centre of our lives.'
It is a tough juggling act, no doubt, but the new kings know how to keep the balls in the air.
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