Monday, April 23, 2007
Results Brief: Tomson (258)
This one is gonna be really brief as there's not much to talk about.
As far as I know only 3 units of Tomson Rivieria (TR) have been pre-sold and Tomson has collected $100m. I also read from the internet that a neighboring development in Pudong is planning to be sold at $60k-80k per sqm. This can be good news for a floor price is established for TR, or bad news as potential buyers may be drawn to the cheaper offer.
There are other developments in Pudong that Tomson is developing including villas around the Tomson golf course (75,000 sqm to be sold this year) and apartments in the Zhangjiang Hi-Tech Park (which have been sold out). These will provide interim earnings before the sale of TR and may actually turn in some impressive figures too given the low land costs. I have not accounted for these profits in my analysis so when it becomes due it'll be bonus.
The big question of LAT remain unresolved. Tomson has provided $246m but it's more likely not to have included provision for TR judging from the size of the provision. Management has made it clear that two blocks will be kept for rental purpose (whether it can be rented is another matter) so it may suggest sale of two blocks before early 2008 when the LAT is due. And how much LAT is gonna levied in the end is anybody's guess but I'm sure Tomson should have no problem borrowing against TR should the funding need arises, and in any case Tomson is in a net cash position so it can raise further debt too.
So the basic story remains intact - Shanghai financial district luxury property developer is trading at only 70% of unadjusted book value. I don't see the need to change view.
DISCLOSURE: I hold 258 at time of writing.
As far as I know only 3 units of Tomson Rivieria (TR) have been pre-sold and Tomson has collected $100m. I also read from the internet that a neighboring development in Pudong is planning to be sold at $60k-80k per sqm. This can be good news for a floor price is established for TR, or bad news as potential buyers may be drawn to the cheaper offer.
There are other developments in Pudong that Tomson is developing including villas around the Tomson golf course (75,000 sqm to be sold this year) and apartments in the Zhangjiang Hi-Tech Park (which have been sold out). These will provide interim earnings before the sale of TR and may actually turn in some impressive figures too given the low land costs. I have not accounted for these profits in my analysis so when it becomes due it'll be bonus.
The big question of LAT remain unresolved. Tomson has provided $246m but it's more likely not to have included provision for TR judging from the size of the provision. Management has made it clear that two blocks will be kept for rental purpose (whether it can be rented is another matter) so it may suggest sale of two blocks before early 2008 when the LAT is due. And how much LAT is gonna levied in the end is anybody's guess but I'm sure Tomson should have no problem borrowing against TR should the funding need arises, and in any case Tomson is in a net cash position so it can raise further debt too.
So the basic story remains intact - Shanghai financial district luxury property developer is trading at only 70% of unadjusted book value. I don't see the need to change view.
DISCLOSURE: I hold 258 at time of writing.
Subscribe to Posts [Atom]