The recent downtrend of the company puts me into the buying radar zone and I managed to purchase 230,000 shares of the company today at a share price of $0.415.
This purchase immediately made this into my top 3 holdings.
You might have recalled that earlier in the year I managed to purchase this at a lower discount at 34 cents (Link Here) when there is still all the ongoing saga about the revolt of the management, and since then a lot of things have happened.
This is a special play situation.
My main thesis of buying into this stems from the fact that E-Shang Redwood (ESR) has now emerged into a substantial shareholder with more than 5% stake.
And of course I think valuation came to an attractive level too.
Do note that ESR currently holds 80% stake in the formerly known Cambridge Industrial Trust and Warburg (largest shareholder of ESR) has a plan to grow and consolidate their industrial properties into one, most notable injection into the currently known ESR Reit.
While the strategic review is still ongoing and we are kept waiting for the outcome, I feel the recent downtrend of the share price presents a solid opportunity for investors to enter.
First, the current price represents a 33% discount to the nav of 56 cents (based on latest quarterly results). Given that ESR is a substantial shareholder for both Sabana and ESR Reit, the buyout would be considered a related party transactions. In order for that to take place under the arm’s length agreement which is usually a lot more stringent, the buyout would have to minimally be offered at least to the nav price. That to me tilts the rewards highly in the favor of those who are vested at this valuation.
If there are anything to add, the last divestment of the properties they made at 218 Pandan Loop was transacted at 13.8% higher than the book value of the properties.
Second, the fact that ESR holds a substantial shareholder stake in Sabana is also a strategic move for the fact that they are able to call for management to convene an EGM. If they are not a substantial shareholder, it would be a lot harder for them to do that. There is a purpose for them to become a substantial shareholder with an agenda.
Third, there are many similarities in the shareholder profile with Sabana and ESR, with Tong JinQuan being one of those who holds both substantial stake. That makes it easier for ESR to convince key stakeholders for a buyout offer.
Fourth, from a technical point of view, we see a much stronger support based on $0.415 while volume sell today is winding down. The next best support would have been at 34 cents (the price I originally bought).
Fifth, the gearing of the company has since reduced from the earlier of 42% to the current of 36%, which means in terms of gearing debtroom, they are able to take more loan to fund the next property purchase, which I deemed unlikely at this point because I feel they would sell the assets.
Sixth, the current share price is trading at an 8% yield. What this means is for as long as the strategic review is not concluded, we would be sitting with a 8% yield while waiting.
Seventh, while 4 of the master leases are expiring this year, 3 of them are coming from sponsor related, so the risk is virtually much lower.
Point 5 to 7 are not something I am after too much at this point so it’s a relatively consolation factor for me.
Thanks for reading.
If you like our articles, you may follow our Facebook Page here.
wow, very strong conviction there , B!
big balls of , errr……, sabana..
i think after your post tdy, we will see the price lift off..
Hi there, just saw on SGX that the ESR deal is off. Bought some this week at 42.5…should I offload?
it will plunge
I`m Charlie Bean and I live in Toronto Canada. I needed a loan to buy a house and I searched for a mortgage loan from all banks and I was denied and I loss hope of having my own house until I came across a post just as you reading my post now. I saw a post about a Financial Service Company who gives loan at 2% interest so I applied in STEAKLEY FINANCIAL SERVICES using their email [email protected]. And my loan was granted it was like a dream but was true and now am a owner of a house in Toronto and am paying the mortgage loan with no stress and I also requested if I can be granted a business loan and I was also granted. Now am living a happy life, I will advice you if you have an financial problems and you need money to settle it so you can pay with no stress just contact Steakley Financial Service at their email [email protected].
eToro is the ultimate forex broker for new and pro traders.
Friendly and quick. For a person who hated going to the dentist I am not dreading my next cleaning!
best orthodontist in madipakkam
Fast cash offer for you today at just 2% interest rate,
both long and short term cash of all amounts
and currencies, no collateral required.
We give out from a minimum range of $2000 to a maximum of $20million.
We are certified and your privacy is 100% safe with us
Apply now for your instant approval and
transfer approval process takes just 24 hours. contact us now
Contact Us At : [email protected]
whatspp Number +918929490461
Mr Abdullah Ibrahim