In the last 5-day Ein55 class in July 2018, a student submitted homework on a portfolio of giant property stocks in Hong Kong including Wharf Holdings (HKEX: 0004). The major shareholder is another giant stock, Wheelock & Co (HKEX: 0020) which also own an undervalue Singapore property stock, Wheelock Properties (SGX: M35).
Similar to many other Singapore property stocks, Wheelock Properties has been undervalue (Price to Book ratio < 1) for many years, as much as 40% discount at one time. Besides, the company has not been appointing a CEO since 2012 as there is little activity for expansion, a strong signal of potential acquisition.
In Jan 2016, share price of Wheelock Properties dropped to around $1.35, below 25% Optimism, an excellent opportunity for acquisition by major shareholder. The opportunity was missed, share prices went up for last 2 months but again corrected down over the past few months from $2.09 to $1.55 after the global stock market correction, as well as 8th round of property cooling measure in Singapore, price was less than 30% Optimism. This time, the parent company from Hong Kong, Wheelock & Co is not hesitating anymore, showing hands to propose the acquisition at low price. With full ownership of Wheelock Properties, especially after the development, all the undervalue assets could give much more return to the major share holders.
Although an investor may be too late now to act on recent news with acquisition of Wheelock Properties (SGX: M35), but one could still consider the parent stock, Wheelock & Co (HKEX: 0020), which is much stronger and still undervalue with 50% discount in Price to Book. The grandparent stock, The Wharf Holdings (HKEX: 0004) is also as strong. However, patience is required for these undervalue asset to appreciate. From Optimism and Fundamental Analysis, Wheelock & Co (HKEX: 0020) is the best choice of all 3 generation of stocks, having undervalue assets, moderate Optimism (39%) and very strong fundamental with active businesses. There are many other undervalue property stocks in Singapore, much undervalue and stronger in fundamental than Wheelock Properties.
There are close connections among regional stock markets (Singapore, Hong Kong, Malaysia, etc), especially for property stocks, either through common major shareholders or family own businesses. Therefore, when an opportunity is missed, an investor may seek the next best opportunity by understanding the company structure to understand the children (subsidiaries) or parents/grandparents (major shareholders stocks).
For Ein55 graduates, you could learn the advanced strategy for regional property stocks and other undervalue stocks in the next charity course on 20 Oct 2018 with Discounted NAV Stocks, Ein55 Mentors Chye Tin and Isabel are busy with the preparation of course notes and new case studies (different from previous DNAV course). Details will be email to Ein55 coaching students about 1 week before the course, if there are seats available, then we will share with remaining graduates (you may contact Dr Tee if invitation email is not received and interested in joining this charity course).
For general public, you may learn about undervalue property stocks with discounted asset strategy from Dr Tee free 4 hour course, register next course in www.ein55.com
