- The 268-unit Sceneca Residence saw 160 units (about 60%) sold at an average price of $2,072 psf.
- Former Realty Centre Condo expected to launch in 2Q23.
- The Group is set to receive recurring royalty income from the licensing of the IP Rights and operating revenue from the operation of the Shimao Tianjie Sky Screen.
Overview
Listed on the Mainboard of the Singapore Exchange, The Place Holdings Limited is an investment holding company with 3 core business pillars:
- Property development and property management activities
- Integrated tourism and related “new retail” businesses
- Media, advertising and branding platform businesses
The Group is backed by the key management team of The Place Investment Group, who became substantial shareholders of the Company after a share placement exercise in 2016. The Place Investment Group is a multi-billion PRC conglomerate that has a strong track record for its extensive business portfolio in tourism, media, property management, biomedical technology investments and international trade.
Financially, they are not doing very well. However, looking at the recent developments in this company, I feel that The Place Holdings have a high chance to turn things around and have a good 2023. In this post, we look at what are the main growth drivers in the company.
Property Developments
There are 2 on-going development projects in Singapore, namely Sceneca Residence located at 26 Tanah Merah Kechil,
and the redevelopment of Realty Centre.
Sceneca Residence
The Sceneca Residence is a 268 unit development located at Tanah Merah Kechil. It was launched on 14 Jan after a 2 week preview. At launch, 60% was sold at an average price of $2072 psf. In addition, the one bedroom and two bedroom units were fully sold. See link below for more info.
The developer is a consortium made up of MCC Singapore, Ekovest Developments and The Place Holdings. Under the Shareholders’ Agreement, the Group will acquire a 20% equity stake in the project company that is developing the mixed development project. MCC Land and Ekovest will take a 51% and 29% equity stake respectively.
Based on rough back-of-the-envelope calculations, The Place Holdings can earn about $24mil from their 20% stake in this development. This means they are going to earn about 30% of its current market cap of $82mil. But do note earnings will be taken into account over the development stages.
Former Realty Centre
Former Realty Centre is a freehold mixed development project at 15 Enggor Street. The Place Holdings bought the 12-storey former Realty Centre in a collective sale with MCC Land and Sun Card Limited agreeing to be shareholders. With the combined expertise of The Place Holdings and MCC Land as the majority shareholders, they envision a differentiated mixed-use property in the CBD area.
This time round, The Place Holdings is holding a larger share of the pie with MCC Land holding a 30% equity stake in the project company that will develop the project. The Place Holdings will hold a 51% equity stake and the remaining stake of 19% will be held by Sun Card Limited.
With MCC Land already involved in the neighbouring One Bernam project, MCC Land will be able to provide valuable input and perfect this upcoming project. I feel that it is a very good partnership.
Former Realty Centre has the potential to yield 35 stories of residential units.
The acquisition of Realty Centre dovetailed with the URA announcement of the CBD Incentive Scheme in the Master Plan 2019. Under the CBD Incentive Scheme, the Realty Centre site is eligible for a bonus plot ratio of between 25% and 30% if there is a change of use to either hotel (25%), residential and commercial (25%) or residential with commercial on the first storey (30%).
Properties around Former Realty Centre are also going through rejuvenation. We have One Bernam, former Fuji Xerox Building and former AXA Tower that are all under construction.
The development is expected to launch in 2Q23.
Digital and Intelligent New Business Platforms
Other than property developments, The Place Holdings is trying to develop digital and intelligent new business platforms serving small and medium-sized enterprises. Their business focus is on integrating traditional businesses with omni-channel strategies and digital solutions to harness new growth opportunities in the digital economy.
Acquire 51% of IP Rights Associated with Iconic Landmark, THE PLACE 世贸天阶 , and Iconic Attraction, THE PLACE Sky Screen 世贸天阶梦幻天幕, in Beijing
On 7 March 2022, The Place Holdings has entered into the sale and purchase agreements to acquire a 51% stake in both Sun Xin Investment Pte. Ltd. (“Sun Xin”) and Sun Oriental Pte. Ltd. (“Sun Oriental”) for an aggregate consideration of
approximately S$46,988,000.
The Place Holdings is expected to receive recurring royalties income from the licensing of the IP Rights for the use in the operation and management of Shimao Tianjie Sky Screen and the real estate properties associated with THE
PLACE, a mixed-use development comprising two top-tier office buildings and a high-end shopping retail mall located at the heart of Beijing’s Central Business District (CBD). In addition, the Group will also generate operating revenue from the operation of the Shimao Tianjie Sky Screen.
The payment will be spread over 3 to 4 years depending on the financial performance of the acquisition target companies. Based on the terms, the first 3 payments are 10% of the EBITDA of the target companies and the remaining to be paid thereafter. If my understanding is correct, this means the bulk of the consideration sum of S$46mil will be made only from the 3rd year onwards.
It is important to note the statement made in the latest 1H22 Financial Statements.
They stated that this acquisition is will generate revenue and profit (hopefully). This will be used to fund their collaboration with Stellar Lifestyle.
Both the Vendors that The Place Holdings are purchasing the stakes from belong to the Chairman and CEO. Not that this is wrong, but it feels like they are monetizing their assets. However, they are the largest stakeholders in the company so I think that overall, what they are doing is still in the best interest of the company,
In my opinion, this acquisition is very important to The Place Holdings as it will provide them recurring cash flow. Currently, they are still burning cash and is not profitable. Hopefully with this, it will turn things around and they can use cash flow to generate more business.
Collaboration with Stellar Lifestyle
Stellar Lifestyle is a business arm of SMRT Corporation Pte Ltd. Together, they aim to develop the “L.I.F.E” Omni Channel Ecosystem.
The Place Holdings will invest approximately S$200 million in the L.I.F.E omni-channel ecosystem and for a start, both companies will focus on the development of the digital platform with technology infrastructure comprising Artificial Intelligence, Big Data, Internet of Things applications, among others, that is integrated within this ecosystem.
In addition, The Place Holdings and Stellar Lifestyle are planning Singapore’s first Sky Screen a suspended 200 meters long video screen that will be an enhanced version of Beijing’s iconic spectacle, 世贸天阶梦幻天幕 (“The Place Sky Screen”).
However, don’t get all too excited. To me, this is still in the lab and is all fluff. I think they will need to provide more updates on this in the next financial statement to give us a colour on what is happening.
Conclusion
I think things are looking brighter ahead for The Place Holdings. The Sceneca Residence is expected to yield a good profit. This will be followed by their development of the Former Realty Centre. Together with MCC Land, they need all the help they can get to maximise their investment returns in real estate and I’m glad there is continuity in this collaboration. Hopefully The Place Holdings can eventually have the capital to develop their own property on its own.
On the other corner, we have the recurring business and assets that will provide cash flow to the company. Hopefully we will see more development in their collab with Stellar Lifestyle.
I guess potential is the word I’m looking for here. With these developments in the company, I think that The Place Holdings has a high chance of beating expectations for FY23. They are only churning about $1mil in revenue and I expect them to grow their EPS after completing the acquisition of Sun Xin and Sun Oriental.
Of course, I need to add a disclaimer that this is not investment advice. This company is still not generating any profit and thus, it is still considered highly speculative. Please do your own due diligence before deciding to invest in any stocks.
Cheers.