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SingHaiyi’s Venture Into US Pays Off
Tradeable, Tradeable Ideas | 10 June 2014
By: Lim Si Jie
Articles (169) Profile
  1. Revenue for FY 2014 jumped almost three times due to higher property development income
  2. SingHaiyi is reaping the benefits of the new management team’s strategy to diversify into US
  3. Positive outlook over the next 12 months as SingHaiyi continues to sell its projects and enjoy rental income.

Company Profile
SingHaiyi Group Ltd, formerly known as SingXpress Land Ltd, is a SGX-Catalist-listed company specialising in property development, real estate investment, property trading and real estate management services. It is currently building four residential developments in Singapore.

SingHaiyi’s Revenue Almost Tripled

SingHaiyi recorded increased revenue of almost threefold since its last financial year. The group recorded total revenue of $57 million for FY 2014, an increase of $40 million from $17 million in FY 2013. The increase was mainly due to higher property development income comprising contributions from Charlton Residences and sales of completed units from Vietnam Town (a project in the US).

Cost of sales increased by $23.8 million, from $10.8 million in FY 2013 to $34.6 million in FY 2014. This is mainly because there were more development projects as compared to the previous year. As a result, gross profit grew by $16.1 million, from $6.2 million in FY 2013 to $22.3 million in FY 2014.

Other income was mainly attributed to the recognition of gain on bargain purchase of $16.6 million from the acquisition of Tri-County Mall (TCM). Change in fair value of investment property also contributed to a huge chunk of other income.

Business Model: Buying Assets At Bargain Prices
The group bought three US properties at a steep discount to their market value, with an aim of reviving these properties through proper redevelopment. SingHaiyi also acquired a land parcel with a 50 percent occupancy office block in San Francisco to redevelop it into a Continuing Care Retirement Community (CCRC) that will provide recurring income for Singhaiyi in 2017.

The group has successfully bid for Vietnam Town through an auction. Vietnam Town, a development project in San Jose, is a partially completed commercial condominium development project comprising of 51 units of completed but unsold commercial units and an undeveloped land parcel.

As at 31st March, the group is in the process of obtaining the title deed of the undeveloped land parcel.

Outlook Over The Next 12 Months
In Singapore, the Group leveraged its strong relationships with strategic partners and forayed into the commercial sector with a 20 percent equity investment in TripleOne Somerset in January this year. SingHaiyi also announced the successful tender for an executive condominium housing development project in Anchorvale Crescent in February 2014.

Over the next 12 months, the Group expects to see further contribution from its Singapore project, Pasir Ris One. It also expects to sell additional units at Vietnam Town in the US, and enjoy full-year rental contribution from TCM.

Including the completed Charlton Residences, the Group and its partners are currently developing four residential property projects in Singapore and one commercial property project in US with a combined gross development value of approximately $1.4 billion.

Singhaiyi creates value for shareholders through investing in undervalued assets. By investing in these assets, Singhaiyi is able to create maximum value through the redevelopment of these properties.

As such, I hold a long term bullish view on SingHaiyi as I believe in the age old adage to “Buy Low, Sell High”. Furthermore, the US property market is likely to move in the same direction as US economy grows.

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Si Jie is no stranger to investing having started his journey at a young age. He is heavily influenced by acclaimed investors such as Benjamin Graham, Peter Lynch, and John Rothchild.

Please click here for more information about this author.

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