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Solid Recurring Cashflow Generators with Upside Catalysts

Quarz Capital Management

2H 2017, Singapore

Havard Chi, CFA

This presentation is a research report and is for informational purposes only. Opinions expressed are solely those of Quarz
Capital Management, Ltd. and this is not a recommendation to purchase securities discussed herein. This presentation is
confidential and may not be reproduced or distributed without the expressed consent of Quarz Capital Management, Ltd.
Please refer to the next slide for additional disclosures.
Quarz Capital Management

Document has been prepared and approved by Quarz Capital Management, Ltd. ("QCM") on behalf of QCM and or any of their related entities or
affiliates. The information presented herein has been prepared for informational or discussion purposes only and is not an offer to buy or sell or a
solicitation of an offer to buy or sell any security or fund interest. No representation or warranty is made by QCM or any of their related entities or
affiliates as to the sufficiency, relevance, Importance, appropriateness, completeness or comprehensiveness of the market data, information or
summaries contained herein for any specific purpose. Furthermore, the market data, information or summaries contained herein may be amended
by QCM or any of their related entities or affiliates at any time without notice. The views expressed in this presentation are subject to change based
on market and other conditions. There is no guarantee that QCM will make investments as discussed herein. None of the content of this document
should be construed as investment advice, nor does it constitute a recommendation to buy or invest in any QCM product. Past performance figures
contained in this document should not, under any circumstances, be considered as being a guide or indication to the future performance of any
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options are implicitly leveraged products. Investments may be subject to sudden and large falls in value and there could be a significant loss on
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trading is determined by QCM Ltd at its sole discretion. Your investment is not guaranteed. The prices and value of investments and the income
arising from such investments may fluctuate and you may not get back what you invested. Changes in the rates of foreign exchange against the
base currency of the investor may also have an adverse effect on the value, price or income of an investment. References to tax are based on our
understanding of current law and Inland Revenue practices, which may change. The investment described herein, may not be suitable for all
recipients of this document and if you have any doubts, you should seek independent advice from your investment adviser, stockbroker, lawyer,
accountant, bank manager or other professional adviser. The performance included in this document has been compiled to show the performance
of selected portfolios managed by us against a defined index. The index benchmark(s) are referred to for comparative purposes only and are not
intended to parallel the risk or investment style of the portfolios managed by our team of Investment Managers and Traders. The portfolio(s) may
not be representative of all funds managed by us. Performance tables stated to be "gross" do not reflect the deduction of investment advisory fees
and where "net" fees are shown, returns are on a reinvested basis net of all expenses and fees. Past performance is not an indicator of future

For further information about the investment products mentioned in this presentation, you may contact QUARZ CAPITAL
MANAGEMENT Ltd., Clifton House, 75 Fort Street, P.O. Box 1350, George Town, Grand Cayman, KY1-1108

Quarz Capital Management

Swiss Family Office and Asset Manager

Quarz Capital ASIA (Singapore) Registered Fund Manager (RFMC) with regulatory oversight
Organization by Monetary Authority of Singapore (MAS)
Diverse background in Asset Management and Corporate Finance
Successful investment track record: CAGR of >15% p.a over 3 year period />11% p.a. 5 years

Investing in Singapore, HK and DACH (Germany, Austria, Switzerland) listed equities

Active Value Strategy (Activist but usually friendly)
Specializing on deeply undervalued companies
For select investments:
1) Active engagement (with Management, Board of Directors and Shareholders),
2) Collaboration with Partners (i.e. Shareholders)
3) Publication of Research Materials
to catalyze value-creational changes to unlock full shareholder value

Concentrated portfolio of highest conviction ideas

Approach Top 15 names comprises 65 - 75% of the allocation
Substantial positions in companies where Quarz Capital undertakes active engagement

Source: Quarz Capital Management

Quarz Capital Management
Campaign Metro Holdings (SGX: M01)
Campaign on Clear Capital Allocation and Communication Strategy

Metros share price at

historical high post
Quarzs campaign


Source: Quarz Capital Management, Bloomberg, Straits Times, Business Times, Barrons, Lianhe Zaobao, TheEdge Markets
Quarz Capital Management
Campaign IHC (SGX: 5WA)
Campaigned on Leadership Renewal and Asset Allocation Strategy

Takeover at a substantial
premium post the start of
our public campaign

Source: Quarz Capital Management, Bloomberg, Business Times, Straits Times, TheEdge Markets
Quarz Capital Management
Campaign HG Metal (SGX: BTG)
Campaign on the Divestment of Stake in BRC Asia and Capital Allocation

Substantial increase
in HGs share price till


Source: Quarz Capital Management, Bloomberg, Business Times, Straits Times, TheEdge Markets
Quarz Capital Management
We are bullish on Singapore
Singapore in the Next 15-20 Years
One of the top global metropolis in Asia
Main gateway city to South East Asia region (population of 630m,
forecasted GDP growth of >5% p.a. in 2017E-2019E)
Regional/APAC HQ for MNCs
Financial Hub
Asias Silicon Valley
Population growth to >6.9m (25% increase) from immigration of
skilled professionals
Heavy investment in sophisticated infrastructure to support the
transformation of the city state
Government has the balance sheet to finance infrastructure
projects (SG sovereign wealth funds and MAS has AUM >USD

Quarz is:
Bullish on the long term prospect of the real estate sector
Positioning to benefit by investing in the best local companies in this sector

Source: Quarz Capital Management, IMF Regional Economic Outlook (Oct 2016), Temasek Holdings, Sovereign Wealth Centre, Monetary Authority of
Quarz Capital Management
Residential Real Estate
Deficit in Future Housing Supply and Strong Household Balance Sheet
60000 260 70
Annual demand for new
50000 units (household 240 60
formation + immigration)
40000 220
20000 40
10000 30
0 Net Liquid Assets comprises
>60% of Household Net Worth 20
-10000 (near 2007 high)
Surplus completion to mitigate
120 Household Net Worth (ex 10
-20000 previous shortfall in supply
Shortfall Property) >230% of GDP
-30000 100 0
2008 2010 2012 2014 2016 2018E 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Household Net Liquid Assets to Equity (%) RHS
Surplus/Deficit Private HDB Household Net Worth (ex Property)/GDP (%)

Home ownership rate >90% and accounts for ~40% of total household wealth
Government has significant control over supply and demand of residential real estate
Undersupply and low interest rates prior to 2011 resulted in substantial in house prices
Ramp up housing supply and implementation of prudential policies
Falling prices and oversupply situation have resulted in the cutback of new construction since 2015
Housing completions in 2018-2019 are in deficit to demand
Relaxation of immigration policies post completion of infrastructure projects to exacerbate the deficit

Residential construction activities forecasted to rebound strongly from 2018

Source: Quarz Capital Management, Singstat, Housing and Development Board, Urban Redevelopment Authority
Quarz Capital Management
Commercial and Hospitality Real Estate
Deficit in Supply of Commercial and Hotel Rooms from 2018E
Singapore Private Office Space (Central Area)
Cyclicality in Net Supply Commercial Space:
Oversupply falling rent and reduction of new sites in
Government Land Sales
0.5 New supply to peak in 2017 - New supply in 2018-2020
is lower than average yearly demand in 2010-2015
-1.0 Forecasted shortfall to drive rental rates and improve
-1.5 asset prices from mid-2018
2000 2003 2006 2009 2012 2015 2018E 2021E
Net Supply Net Demand
Singapore Hotel Room Supply
8 7.5
6.6 Hotel Rooms:
3.7 4.2 5.0
Overoptimistic tourist arrival projections and peak room
5 rates oversupply of hotel rooms since 2012
RevPAR peaked in 2012 and has been declining till
3 2.2
0.7 1.5
51,622 54,962 56,972 61,238 63,797 66,997 67,472 68,934
No hotel sites in Government Land Sales since 2014
2013 2014 2015 2016 2017E 2018E 2019E 2020E
Growth in supply to taper down to <2.2% p.a. post
Hotel Supply New Supply Growth in Supply (%) 2018

Rates for commercial & hotel space forecasted to rebound from mid-2018 due to supply deficit

Source: Quarz Capital Management

Quarz Capital Management
Case 1: The Tuan Sing (SGX: T24) Opportunity 1/2
Landlord of Landmark Properties in Singapore and Australia

With Asset Base in Excess of $ 2.6bn

Quarz Capital Management
Case 1: The Tuan Sing (SGX: T24) Opportunity 2/2
Top 10 SGX listed property development and investment
player (by asset value)
Liem Family and Koh Wee Meng have 53% and 6% stakes
Trades at rock bottom P/B of 0.35x attributed to:
Lack of analyst coverage/understanding of the company
Low dividend yield of 1.9%:
Investing substantially in development projects
Rental income to only increase from 2018
Perceived high leverage due to undervalued Mkt Cap (LTV
of 55%)
Breakdown of Assets Key Statistics
Cash+ Receivables
Non Core Assets
7% Last Price1 $ 0.320
3 Year Range1 $ 0.275 0.475
China Assets Shares Outstanding2 1187m
Market Capitalization $ 379.8m
SG Invt
Properties Gross Asset Value1,3 $ 2639.6m
AU Invt Properties 57% Net Asset Value1,2,3 $ 1034.7m
NAV/Share $ 0.908
SG Properties for Discount to NAV 64.7%
4% Dividend/Yield 0.006 / 1.9%
SG Devt Properties 1) Bloomberg data as of 30 May 2017
4% 2) Based on Tuan Sing FY1Q2017 Financial and Annual Report
Total Assets: $ 2639.6m 3) Based on QCM estimates and Tuan Sings FY1Q2017
Total Liabilities: $ 1562.2m Financial Report
Source: Quarz Capital Management, Tuan Sing Holdings Limited
Quarz Capital Management
Case 1: Tuan Sing Singapore Investment Properties

Robinson Tower Robinson Point Sime Darby Centre Others

Value $ 668m $ 352m $ 365m $ 126m

ASP $ 3435 psf $ 2621 psf $1800 psf $ 530 2150 psf
999 yrs Freehold 999 yrs/Freehold 999 yrs/Freehold
$ 16.8m $ 9.3m $ 9.1m $ 3.3m
Asset enhancement potential Uplift in rental income from
Uplift in rental income from
Remarks Completion slated in 2H18
(Only utilizing 80% of total 2018 with asset
NLA) enhancement potential

Attractive SG Investment Properties valued at $ 1.5bn which generates recurring net rental
income in excess of $ 40m p.a. from 2H18
Source: Quarz Capital Management, Tuan Sing Holdings Limited
Quarz Capital Management
Case 1: Tuan Sing Australia Investment Properties

Grand Hyatt Retail and Carpark Retail and Comm

Hyatt Regency Perth
Melbourne Hyatt Melbourne Hyatt Regency Perth
Value $ 348m $ 135m $ 63.4m $ 91m
NLA 550 rooms 32,550 sqft 367 rooms 252,037 sqft
ASP $ 632k/room $ 4140 psf $ 173k/room $ 361 psf
Freehold Freehold Freehold Freehold
$ 30.5-35.5m p.a.
Asset enhancement in
Remarks Continue to benefit from strong inbound tourism (+11% YoY) especially from Greater China
Prime hospitality assets valued at $ 638m which generates recurring operating income of $ 30.5
Source: Quarz Capital Management, Tuan Sing Holdings Limited
Quarz Capital Management
Case 1: Tuan Sing - Catalysts
Key Catalysts:
1. Increase in recurring operating profit to more than $ 70m p.a. to potentially double
dividend payout (~4% Dvd Yld)
Completion of Robinson Tower ($ 17m rental income p.a.)
Increase in rental rates of Robinson Point and The Oxley

2. Potential divestment of assets into REITs in 2019E

Sizeable completed asset portfolio of $ 2.2bn
$ 500m 1bn (vs Mkt Cap of $ 380m) of capital can be released through reduction of stake in
proposed REIT to 50-75%
Capital released for special dividend and to further grow real estate portfolio (asset light
Current discount of 65% to book to narrow to 30-40% (>40% upside in share price)

3. Sale of non-core assets (Gultech, Giti), property inventories (Cluny Park) and new
developments to unlock capital of $ 350-400m
Reduction of Total Liabilities to $ ~1.2bn and LTV to ~50%

Potential Upside of >40% by 2019

Source: Quarz Capital Management, Tuan Sing Holdings Limited

Quarz Capital Management
Case 1: Tuan Sing Share Price
Potential Upside in Tuan Sings Share Price (by end 2019)

Koh Wee Meng purchased 6.5m shares

0.46 @ SGD 0.43, bringing his stake in TS >30%- Accelerated execution of asset
to 5.02% recycling strategy
20-30%- REIT exercise in progress,
0.42 commencement of AEIs, increase in
recurring Dvd payout, potential special Dvd
Push back in the +10-20% - Completion of Robinson Tower
0.38 completion date increase in recurring income to SGD 70m,
of Robinson Tower
increase in Dvd payout to 20% (Dvd Yld of
4% p.a.)

-5-+10% - Range of total return without
catalysts. Downside backed by prime
assets @firesale P/B of 0.33-0.39x at these


Share price bottom of SGD 0.27 since 2012
Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19
Source: Quarz Capital Management, Tuan Sing Holdings Limited
Quarz Capital Management
Case 2: The Far East H-Trust (SGX: Q5T) Opportunity
Pure play SG Hotel Trust with 2830 rooms/apartments
8 hotels and 4 service apartments in prime locations
(Orchard Rd, Clarke Quay, Bugis)
Target Mid-Upscale business travellers and tourists
Ng family has collective stake of ~57% in Trust
Current situation:
30% in share price since IPO in 2012
in DPU by 33% since IPO due to fall in RevPAR
trades at ~$ 700k/room (transactions at >$1m/room)
lack of broker coverage
Key Statistics
Last Price1 $ 0.670
3 Year Range 1
$ 0.575 0.885
Shares Outstanding 1833.0m
Market Capitalization $ 1228.1m
Gross Asset Value1,3 $ 2477.4m
Net Asset Value1,2,3 $ 1639.1m
NAV/Share $ 0.900
Discount to NAV 26%
Dividend/Yield 0.039 / 5.8%

1) Bloomberg data as of 20 July 2017

2) Based on FEHT FY1Q2017 Financial and FY 2016 Annual

Oasia Novena Orchard Parade Hotel

3) Based on QCM estimates and FEHT FY1Q2017 Financial
Source: Quarz Capital Management, Far East Hospitality Trust
Quarz Capital Management
Case 2: Assets of Far East H-Trust
Assets in Prime Locations
Orchard Road = 46% of NAV, 1140 rooms

Clarke Quay Bugis

13% of NAV 14% of NAV
200 rooms 603 rooms

Source: Quarz Capital Management, Far East Hospitality Trust

Quarz Capital Management
Case 2: SG Hotel Supply
Pressure on Rates in Hotel Sector to Ease from 2018E
180 -1.8%
166 -6.1% 6.0% Date Name Rooms
156 -6.3% 6.0% 153 May-17 Park Hotel Farrer Park 300
160 -4.8% 7.0%
146 144 Intercontinental
139 -8.5% Sep-17 225
136 Robertson
140 Sep-17 Sofitel Tanjong Pagar 222
Sep-17 Andaz (Duo) 342
120 1,000 Nov-17 Yotel Orchard Rd 610
3,200 475 1,462
2,559 Nov-17 Duxton Terrace 138
4,266 2.2% 1.5%
100 5.0% 0.7% Nov-17 Duxton House 50
2,010 4.2% Dec-17 Novotel Stevens 254
3,430 7.5%
80 3.7% Dec-17 Mercure Stevens 518
Dec-17 Laguna Dusit 197
68,934 Dec-17 Patina Capitol 157
60 63,797 66,997 67,472
61,238 2018 Aqueen Geylang 100
54,962 56,972
51,622 2018 Frasers @ China St 306
2018 Aqueen Lavender 69
2019 Outpost Hotel Sentosa 230
20 2019 Village Hotel Sentosa 620
2019 The Clan 292
0 2019 Yotel Changi Jewel 130
2013 2014 2015 2016 2017E 2018E 2019E 2020E 2019 The Edition Marriott 190
Hotel Supply New Supply RevPar (FEHT)

Substantial growth in new hotel supply from 2012-2017E

Most of 2017 supply will come on stream in 4Q17 (forecast -8.5% in RevPAR)
FEHTs RevPAR peaked in 2012 and is forecasted to decline a total of ~25% by 2017E
New supply will taper off in 2018 (<2.2% growth p.a. thereafter)
No hotel sites in Government Land Sales sites since 2014
Forecast FEHTs RevPAR to recover back to 2014s level in 2020E
Source: Quarz Capital Management, Far East Hospitality Trust
Quarz Capital Management
Case 2: Far East H-Trust - Catalysts
Key Catalysts
1. DPU to trough at $0.039 (5.8% Dvd Yld) in 2017E
-11.1% from 2016s DPU
Fixed rent component provides DPU floor of $0.028 (4.1% Dvd Yld)
RevPAR of $127 (Average Daily Rate of $146) - 2006/7s levels
Replacement cost >$900k/room in prime locations

2. RevPAR to grow by 20% from 2017E to 20120E

Key Biannual events in 2018 (SG Airshow, Hotel Asia, SG Biennale, World City Summit etc.)
Forecasted growth in inbound tourist arrivals by 4-6% p.a.
Tightened supply of new hotels
Increasing number of attractions (Sentosa & Mandai), SG as a global metropolis for business
Asset enhancements of FEHTs hotels

3. Acquisitions and completion of Sentosa Hotel to drive revenue by 20% by 2020E

Oasia Downtown will stabilise by 2H2018
850-room Outpost and Village Sentosa (30% shareholding) to be completed in end 2018
LTV to increase from 32% to 41% (slight decrease in cap rate)

4. Potential increase in share price by ~15% due to compression of 2019E Dvd Yld to 6.7%
7.6% Dvd Yld in 2019E at current price with forecasted 6% growth in 2020E

Cyclical and structural catalysts to drive DPU growth of ~40% from 2017E-2020E
Source: Quarz Capital Management, Far East Hospitality Trust
Quarz Capital Management
Case 2: Far East H Trust Share Price
Potential Total Return in FEHTs Share Price (by end 2019E)
>30% - Earlier acquisitions and better
than expected economic growth and
tourist numbers

FEHTs RevPAR ~30% - Total DPU of $0.109 (Dvd Yld of
forecasted to be back 16%) + compression in 2019 Yld from
at 2014/5s level in 7.6% to 6.7% (~13% share price upside)
0.800 ~20% - No acquisitions resulting in
conservative balance sheet, LTV to
0.760 remain at ~33%

0.720 -5-+10% - Lacklustre tourist arrivals,

Consistent higher than anticipated competition from
fall in DPU new supply. Downside backed by fixed
due to fall
rent Dvd Yld of 4.1%
in RevPAR


Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

Source: Quarz Capital Management, Bloomberg, Far East Hospitality

Quarz Capital Management
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