I Reinvest In This Singapore Developer Again! - Part 1

Today, I will be writing about a Singapore Listed Developer that I had re-invest in – Bought in 2015, sold in 2018, bought again recently!

The company is Bukit Sembawang Estates Limited (Ticker: B61) and is listed on SGX.

Logo taken from The Official Atelier Website

I have also written quite a few articles on this company since 2015 (You can click on the label at the bottom of the page to find all its related articles). 

Here are the highlights based on its most recent FY2022 half yearly report and FY2021 annual report:

1. Share Price is Close to NCAV 

NCAV is the net current asset value which is a metric that is made famous by Benjamin Graham - the grandfather of value investing. 

NCAV Formula as per Wikipedia

The Current Share Price of S$4.960 is only about 4% higher than the NCAV of S$4.760. 

Furthermore, the current asset consists of over 44% of cash - which meant that the company's current asset is very liquid. 

If a sudden need for cash arises - like purchasing land banks for future development - the company can easily pay for the purchase.

2. High Net Cash Amount

Balance Sheet as of FY22 Half Yearly Report

Bukit Sembawang has a net cash amount of S$452m. With a market cap of S$1.29bn, this meant that the net cash constitute 35% of the company’s market cap!

3. Dividend is back at 33 cents!

In one of my past articles, I mentioned that some fundamental changes resulted in the company having a significant reduction in cash, which led to the company reducing its dividend and eventually affecting the share price. 

Bukit Sembawang Dividend Payout as per SGX Website

As per the above SGX screenshot, I was correct as dividend was 33 cents from 2015 to 2017, but fell below 33 cents from 2018 to 2020 (18 cents in 2018, 22 cents in 2019 and 11 cents in 2020). 

As per 2021, the dividend is restored back to 33 cents – which amounts to S$85.4m of cash requirement.

This dividend payment is currently viewed as sustainable in at least the next 2 years since the net cash can support at least 5x of this cash requirement to pay dividend. 

*For the international readers, do note that dividend investing is somewhat core to investing in Singapore since Singaporeans are not taxed on the dividend.

4. Special Major Shareholders

As stated in another past article, I stated that there are some special shareholders in Bukit Sembawang.

In an Investor-One article, it is stated that the shareholders are the Lee family, which is the founding family behind OCBC Group, that owns a combination of direct and indirect ownership of 40%.

Screenshot of The Investor-One Article

As (1) the shareholders did not change since 2015, (2) the company having sufficient cash, (3) Singapore being a dividend tax free country, and (4) Bukit Sembawang has a past history of giving 33 cents annually, it does not make sense that they will not approve the continuation of the proposed 33 cents in dividend for 2022.

Therefore, the chances of having 33 cents dividend in FY2022 is very high.

I will pause here for the moment, if not the article will be too long. The next article will be release tomorrow at 9am and it will state my most important reason, as well as my conclusion for Bukit Sembawang!

Stay tuned!