Creo Medical Share Discussion Threads

[longsight] 26/8/2010 21:37

26/08/10 Treasury China Trust forms strategic partnership to expand into Shandong Province commercial property market in China



Singapore, 26 Aug. 2010 - Treasury Holdings Real Estate Pte Ltd, the Trustee Manager of Treasury China Trust ("TCT"), today announced a Strategic Partnership Agreement with the Qingdao-based TRIO Group to expand into China's east coast province of Shandong in what CEO Richard David says, "is the first in what we expect to be a number of such announcements in the coming months to broaden TCT's China footprint." This strategic cooperation marks an important first step for TCT, which listed on the SGX in June of this year with SGD1.9 billion in assets, into China's regional gateway cities outside of its current base of Beijing and Shanghai.

[longsight] 26/8/2010 21:33

26/08/10 Treasury China Trust forms strategic partnership to expand into Shandong Province commercial property market in China

Treasury Holdings Real Estate Pte Ltd, as Trustee Manager of Treasury China Trust ("TCT"), wishes to announce the completion of a Strategic Partnership Agreement with the TRIO Group to expand into China's central coast province of Shandong. This marks a strategic move for TCT into one of China's major gateway cities outside of Beijing and Shanghai that will provide access to investment opportunities for TCT on a strongly accretive basis.

TRIO Group has been operating in Qingdao (or Tsingtao) and the broader Shandong Province with great success for over 15 years and has developed high quality real estate projects totaling in excess of three million square meters representing more than 20 projects, predominantly in the residential sector. TRIO has been the recipient of numerous awards and in 2008 was recognized as Qingdao's "Outstanding Real Estate Developer" and ranked in the city's Top 20 Private Enterprises. The group is aspiring to develop a diversified real estate portfolio and gain a strong foothold in the fast growing commercial property sector through its alliance with TCT.

This Strategic Partnership will concentrate exclusively on commercial real estate, with a particular focus on retail properties and TCT will assume a majority equity and managerial control of all invested projects, from overseeing all design, development and asset management functions, to providing technology and systems transfers to TRIO through the shared management platforms. Market access is a fundamental component for the partnership and in this regard, the partnership ensures exclusivity and investment rights for both parties. Accordingly, TRIO will utilize its local market knowledge and established network in Shandong Province to introduce investment and development opportunities to the partnership.

TRIO Director, Xie Jing Dong confirmed the group's commitment to a long-term partnership with TCT, "We have been very impressed with the management platform and asset portfolio that TCT has built to date and the strong commitment it has made to China's commercial real estate sector. This partnership recognizes true alignment and combines the key individual strengths of TCT and ourselves to drive strong and significant long term investment performance for our mutual benefit."

Located on China's central east coast, Shandong is one of China's most populated provinces and third largest in terms of GDP. Its total retail sales recorded 9.9% growth reaching RMB 1,236 billion in 2009, ranking 2nd nationwide, behind only Guangdong Province. Qingdao, probably best known for its annual beer festival, is China's fifth largest seaport and amongst the top 10 ports globally. It is one of Shandong's most dynamic and affluent cities and is further advantaged by its international airport, which provides direct access to major cities in Japan and Korea on a daily basis. Tenant demand for quality, international grade retail space in Qingdao is robust, however this demand has been largely unmet due to constrained supply and limited participation of quality, experienced international developers.

CEO Richard David, commented "We are very excited about this Strategic Partnership, and in TRIO we have identified a strong and capable group to assist with the continued growth of our business in China. It is critical to our ongoing success that we develop strategic alliances in key provincial regions. In this regard, the Shandong Province and particularly Qingdao, as a major east coast city, meet our expectations for economic growth and access to opportunities with accretive growth characteristics. TRIO has an excellent record in quality real estate development and in identifying and delivering direct access to investment opportunities. We look forward to a long term relationship with TRIO that will add considerable benefit to TCT and its unitholders."

[longsight] 25/8/2010 09:45

LBO - thank you for the above post.

I have been in contact with TCT about the Parkson lease & the points raised by Eddie about NAV. The responses I have received so far have been very open & helpful - & imho reassuring. I will update the BB as soon as I have completed my correspondence with TCT.

I think whatever the considerable disappointment so far with the relisting, TCT are not a sell at these levels. I intend to hold very long term. I consider the management team top notch - read the listing doc for details. I think the prospects for Shanghai commercial property look phenomenal. I listened to a video on Bloomberg last week with a fund manager specialising in HK & PRC Property mkt [search for Churchouse video on Bloomberg.com if interested]. He was quite cautious about PRC housing mkt but his final comment was that those with a long term perspective, Shanghai was the place to invest citing the growth in the financial services industries. Check out also Jing Ulrich's interviews. Jing also thinks financial services are a huge growth story over the coming years in PRC. I have also argued all along on here that 2 big reasons to be in TCT are the growth in retail consumption in PRC & the growth in financial services in Shanghai. The mega discount to NAV is the cherry on the cake.

[lbo] 17/8/2010 12:00

China overtakes Japan to become second largest economy in world

[vondutch] 16/8/2010 17:38

Eddie - I read this occasionally and appreciate your comments. It's always good to be reminded of both sides.

Longsight - I don't know what % of your portfolio you have invested here, but if you wait then I agree it will represent good value in the future (1.5-2 years) when rents appreciate and income increases (which is what you have already stated). I don't bother posting on here often because I don't see the need..I hold and intend to hold until the value comes out. Short-term I honestly don't really care (unless there is an excellent opportunity to buy some more cheaply).

If I felt I had a particularly valuable insight I would be happy to share it, but until then I will remain a mostly silent holder.

[longsight] 15/8/2010 11:24

Eddie - I don't rubbish your contributions & in fact I'm grateful that you do post on here since very few bother to do so.

But your points are slightly partial. If you consider that an increasingly hi % of the portfolio is retail, there is not an obvious surplus of retail space in Shanghai - rather looks to me like the reverse. The Property Agent's assessment of the portfolio was pretty upbeat & a lot of these lo rentals are going to go to market value following the refurbs.

Looking at JP Morgan's estimates for divi growth by 2013 & 2014, I think these do look very cheap & will be hi yield for those who paid current prices.

[eddie1980] 14/8/2010 11:27

Longsight, I own shares but am just annoyed I reacted to (partly my own) hype about them before I bought a lot prior to the move.

What I find funny is people who can't consider opinions other than their own.

With a lot of these shares, you say one thing, others something more conservative and the share price tends to agree with those.

JP's report says the NAV's are based on market rents, which TCT does not currently have. There is a lot of property supply in Shanghai as well. (Clearly in TCT's case else how else do you explain the low rents - do you think they just felt kind!) Can you see key tenants paying 8 times their current rent at the end of their current lease, or do you think they would seek better terms elsewhere (or with TCT) - either way, how do you get to market rates?

Same with the other article you post, what was the base rent that increased 82%. Just proves point that currently tenants are on v.low rents.

Yes, Directors bought, but of course in their interests as they get both salaries from TCT and take $30m odd from the Co in all the fees for Treasury Holdings each year so you would hope they want to show some support for it!

What is your definition of strong profits - so profits of $0.1 is about 6.5% of current share price in 3 years times - jeez you have a generous definition of strong.

Given, you have said you think the share price will be (over )3 times higher by then, it will be producing profits of about 2%! of your price then - that's tremendous.

I would say that its probably a bit too early to get excited about the dividend as well considering they don't make a profit for three years and even then the full year profit is the amount they are paying out this year, so its not going to be a payment from their earnings for the year.

(do you know any other property company where you have to wait three years to hope the rents actually cover the cost of interest and management fees - nope me neither.)

[eddie1980] 09/8/2010 18:19

Does anyone actually understand how TCT value their property, or rather get their NAV. To me, the NAV is the net asset value i.e the value the asset is worth if sold.

It seems I haven't read the broker notes in enough detail. The investment risks (page 5 of JP Morgan note) indicate that NAV is derived from assuming that the incumbents leases will be continued at market rates, so based on the rental yield it can achieve.

I know this all goes round in circles, as what a property can be sold on is based on the yield it can achieve, but the key here is TCT's stated NAV is based on rentals that it has not achieved, only that it hopes to achieve in 3 years time.

This is similar to what I have been stressing that the buildingss value should be considered on the income streams they can produce.

To put this into context. Parkson currently occupy city centre and pay a rate of 1.73rmb per sq mtr per day - the market rate is approximately 14rmb per day per sq mtr.

Parkson have 26k of space out of 150k - so 17% of the space is let at an 1/8th of the going rate. It would be good if we were told the percentage of space let in total that at heavily subsidised rates.

So Parkson is paying 12.35% of the going rate. The report states that is is similar for a number of tenants and that these generally only revert to market rates in FY13, so 3 years away.

So the value of the property is derived using rental rates 8 times more than they are actually receiving.

Kind of explains why the share price is so low compared to NAV doesn't it?

Key questions - why are so many tenants on deals at such a low percentage of market rate? Why did they require such discounts?

What will happen in FY13 - will they have to offer such discounts again to keep these tenants?

Still, I am amazed that they are currently allowed to state their NAV based on rental rates they have not achieved, unless tenants are locked into contracts at market rates from FY13.

I would advise all to read the JP morgan report.

[newswseller] 09/8/2010 14:10

Because it has been delisted and moved over to the SGX

[unruley] 09/8/2010 11:30

Why is it stuck at the same share price for so long.

[longsight] 05/8/2010 15:13

Eddie - the share price is starting to recover a bit - don't sound so miserable about it.

Frankly, I think the Co is underselling its prospects. If retail consumption continues to grow yoy at 18%+ & rentals follow suit, then I reckon the cap values of the 45% of TCT's portfolio will increase by a multiple of more than 5x in the next 10 years - except that since NAV is leveraged with debt, the increase in NAV for the retail part of the portfolio shd be even more dramatic.

My wife has tucked away a big chunk of these for her pension.

[eddie1980] 05/8/2010 14:32

Good to get press coverage - but its a bit back slapping - surprised its not been released by the company themselves!

[longsight] 05/8/2010 08:41

3 August 2010

Business Times Real Returns in Chinese Real Estate

TREASURY China Trust (ticker symbol: tct) is the latest addition to a growing and impressive list of cross-border property vehicles trading out of Singapore's stock exchange. It has proved a stand-out performer in the rough and tumble of China's commercial real estate landscape, reaping benefits from the strong history of its sponsor, Treasury Holdings, which has been successfully investing into Europe's commecial real estate markets for more than 20 years.

"We always play to our strenght, that is the key to our success", recounts CEO Richard David, himself a long term participant in China's real estate marketm having relocated to China in 1999. "I have seen many foreign companies seek to create a platform in China, but in doing so compremised what made the successful in their own markets." As David tells it, Richard Barrett and Johnny Ronan, the founding partners of Treasury Holdings, took a vastly dirrerent approach, understanding that their point of difference was their significant experience in overseas markets enabling them to exploit a first mover advantage into China's immature but burgeoning commecial real estate market.

With a portfolio approaching 400,000sqm, valued in excess of SGD1.9 billion, entirely denominated in Renminbi and located exclusively in China's prime commercial markets of Shanghai and Beijing, Treasury China Trust has made good on its promise to be a major player in China's growth story. And since June of this year TCT has offered Asian investors the opportunity to access this exciting and fast growing market through its SGX listing, which is projected to deliver a dividend yield in exess of 6.0% on an annulized basis from 2010.

And there is plenty of reason to remain enthusiastic about commercial real estate in China. The retail property market has remained strong over the last four years and prime retail rents are presently expected to grow at 7 percent per annum. After the slowdown in the office market in 2009, linked directly to the global financial crisis, this sector too is showing upside during 2010.
Importantly, TCT has created critical areas of differentiation with a unique combination of income-producing real estate and quality development projects. This is a topic that its CEO warms to, "in mature markets like Singapore, pure REIT structures can combine the acquisition and completed assets with accretive growth, but China is not to that level of maturity and it is critical that development plays its part in securing asset growth that delivers accretive earnings." So unlike REITs, TCT maintains a healthy level of development capacity at 30% of its total assets, bus delivering strong revenue growth at attractive yields."

Much of TCT's growth, which is anticipated to deliver a twofold increase in gross revenue across the next 36 months, can be attributed to its proactive and experience management platform which now exceeds 80 committed professionals encompassing all aspects of real estate and financial management. "Think global, act local" is their motto according to its CEO and with their staff comprising over 80% local Chinese, this claim is not without merit. Most recently, TCT's senior management team was further strengthened by the appointment of highly experienced pair Jerry Lee and CFO, joining after 12 years at Guoccoland, and Wendy Yao assuming the CIO role after four years as China head atCitigroup property investors. "Jerry and Wendy bring critical experience and depth to our team complementing the considerable skills and execution capabilities of Richard Ding and Chief Strategy Officer and COO Simon-Harding-Roots, a veteran of more than a decade in large-scale mixed-use Development in the Middle East," remarked David, clearly pleased with the formidable team Treasury has assembled.

The strength of this team has its external supporters too, evidenced by ICBC's recent commitment to a multi-currency 5 year loan facility equivalent to SGD658 million, which in the current environment of China's real estate markets being drained of liquidity I a cautious central government, is a remarkable achievement. "We couldn't be happier," TCT's new CFO Jerry Lee observed. "The recent settlement of this loan facility speaks volumes as to the quality of our assets and management and with a very conservative debt-to- asset ratio of approximately 30%, and capital structure is geared for growth."

As to the future, TCT's CEO remains upbeat, "the strength of our rent roll, represented by over 80% international and multi-national tenants, combined with the growth opportunities in our fully-funded development pipeline provides a strong platform to grow the business and its revenue streams. Our recent listing on Singapore's main board provides access to Asia's sophisticated investor base and continues Treasury's philosophy of clothes alignment with the markets in which it operates."

[flip101] 05/8/2010 06:24

200k+ traded overnight. Something had definitely changed in the last 3 days.

[ashthorpedo] 04/8/2010 16:08

I have no intention selling either. Certainly not at the current price. Its just psychologically hard every time I look at my account and see a large loss at CREO.

[newswseller] 04/8/2010 14:56

I still don't have mine (TDW) but plan to give it 6 more months before deciding to sell or hold, so doesn't really matter to me.

[ashthorpedo] 04/8/2010 14:49

My TCT shares have still not been credited to my trading account. Just got off the phone to T D Waterhouse who told me that it would take several more weeks as the the transfer is so complex. I don't know if this is true or I'm being spun a line.

[longsight] 04/8/2010 07:57

Eddie - to my bull argument I wd add the potential revaluation of the SGD & the RMB in which assets & the share price are denominated against the US$ in which a large % of the loans are denominated & the £ [for enhancing cap gains for UK shareholders]

[flip101] 04/8/2010 07:09

Decent volume again so far today.

[flip101] 03/8/2010 15:58

Eddie, valid points however the Irish now have a sub 50% holding and larger shareholders are not happy with the current situation. This current valuation gap will not be allowed to persist for a significant period of time.

[eddie1980] 03/8/2010 15:01

longsight - why do you think the shares trades at such a discount to NAV, and why do you think that it will be at such a small discount in 2014?

You are predicting a dividend yield of 2.18% (and a payout of circa 90% of EPS) in 2014 - hardly inspiring for a property company.

Based on JP Morgan's report (with a June 2011 target of $2 - again hardly an inspiring increase considering it listed in singapore at $1.80.), the company's EPS is negative until 2013 - in 2013 it generates $0.10 (and so pays a dividend of 100% of EPS) and only $0.13 EPS in 2014.

It is clear that the market values TCT lower than its peers and this is not just the fact it was listed on AIM, or is now only just listed on Singapore exchange.

So I would be interested in knowing why you think the market will reduce the gap to NAV. Is your assumption of $5.5 a share just a guess on a smaller gap to NAV? Why do you think the market will value a share that creates $0.10 in 3 years time at $5.50?

NAV may look impressive but this company generates zero income from it (negative in fact for the next 3 years) - I've not seen many property firms achieving that!

If you owned these assets, you would sell up now as you can't generate a return from them. But the majority shareholder does, so they will not sell!


Per the JP Morgan report, EPS in 2014 will be $0.13. Your assumption is that the NAV will be $6.50 - so the assets are producing a yield of 2% - that is a very poor return. Even in Boom times, London properties had a yield of 4-5%, now its more like 6-7%. Could the assets be overvalued? Could they ever achieve those prices in a sale?

Funds generally invest in propety firms for a yield. Look at the carnage to UK property shares when they stopped paying dividends in the slump. Unless the company is going to sell the assets (v.unlikely here as treasury is major shareholder, and they generate large returns from the buildings through their fees), the shareholders get very little return for their money.

There is no point in saying 'yes, but the assets are worth £xxx' because you have no control over the ability to sell them. And the major shareholders receive a far greater return than you as they collect the mgmt fees. You could hold the share for 100 years and if it only produced yields of 1-2% pa, it would always be valued at a discount to NAV as this is the only return you will get from the share, if zero chance of being sold.