Saturday, November 29, 2008

The Sexy VJC Girl Analyses Cambridge Industrial Trust

The SEXY Victoria Junior College girl has been spending a lot of time with us. Out of the blue one day, she emerges with the maximum value that one should pay for Cambridge Industrial Trust. ( She is really quite interesting and surprising!And she like to determine the Value of anything. For example, she even determines the value of playing tennis vs spending time with us and she comes up with a figure.) Anyway, she told us that her teacher says females are better at investing and guys suck cos guys monitor the stock market too much and think too much and rationalise too much. She also told us her teacher says its the female species that will bring the world out of recession cos her species spend and spend and spend and spend. We got to admit she is right. Just go to a shopping center near you and see who are the ones spending? Its the girls......

Ok let's understand how our SEXY VJC student determined the maximum value of Cambridge. Any amount paid more for Cambrige, you are likely to lose money. ( based on Discounted Cash Flow analysis, excludes Market Irrationality).

Based on Colliers International data above, it is logical to assume that the rental income growth rate g of industrial properties is 0%, by looking from 2001 to 2006F. ( just a cursory glance, she did not do a regression line. Keep it simple. It looks negative actually but let's be nice.).

Based on the above from SGX, the average dividends, D, of Cambridge Industrial Trust for 2007 and 2008 is $0.0616.

Let's use DBS preferential shares of 6% as our required rate of return, K.

Now, let's look at the average number of years that the assets of Cambridge Industrial Trust have to their expiry as all of them are leasehold except for Lam Soon Industrial which is Freehold. (We will assign 999 years to this freehold property. This is just a judgement call.)

From above, the average number of years left to expiry is 65 years. Therefore, the formula we will use is :

Using Excel spreadsheet and plugging in the values, the Fair Value (V) for a Cambridge Industrial Trust share is $ 1.00341. Thats the maximum amount one should pay and it assumes that Cambridge is able to sustain the average occupancy of its premises currently. It also assumes that the rentals do not drop and stays constant. It also assumes no exceptional things like volcanic eruptions or earthquake or fire or Tsunami or Terrorist attack happens on any of its site. So the market price currently as of close 28 Nov 2008 is $0.205. Is it enough for you?

Analysis done by The SEXY VJC GIRL (Aspiring Future Venture Capitalist- who wants to hire her as an intern?)

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

13 comments:

  1. Oh damn! your analysis is hilarious! keep up the good work.

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  2. Hi SGDividend,

    Does this sexy Victorian girl really exists?

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  3. Hi Derek,

    Yes, she exists and she is gonna be the greatest investor in the future.

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  4. Hi SGDiv,

    whow cool. More sexy Victorians please. ;)

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  5. Hi SGDiv

    LOL! I like the combination of SEXY and Girl with Investments. Usually hard to find such articles in blogs about investment and money.

    As hardwarezone forummers are wont to ask, peektures because SIC! (Sharing is caring!) or GPGT, "got picture, got talk".

    Be well and prosper.

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  6. Hi PanzerGrenadier,

    The reason for not revealing such a GEM as our SEXY VJC girl is exacerabated by the following breaking news!

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    Home > Breaking News > Singapore > Story
    Dec 4, 2008
    Man preyed on young girls
    By Sujin Thomas

    GRABBING and gagging one girl with his bare hands, forcing another to undress, the man preyed on these young girls in the Housing Board flat lifts in Choa Chu Kang twice in October.

    On Thursday, 19-year-old chef Tan Boon Ann pleaded guilty to outraging the modesty of the two girls in a district court.

    He was sentenced to four years in jail and six strokes of the cane.

    The court heard that on Oct 6, an eight-year-old girl entered a lift together with Tan, pressing the button for the 7th floor. Tan pressed the button for the 11th floor.
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~`

    Anyway on a serious note, confidentiality is great for this blog. The reason being that we get speak freely and independently and not be worried about being ostracised by people who can't accept people who have different views. See how much flake Xiaxue or Dawn Yang has been getting from being overly exposed....SEXY girl still has to go to school....for an eye feast, go www.dawnyang.com..=)

    Nice Financial Freedom Newsletter you wrote by the way =)

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  7. Sgdividends

    Point noted. Chio-bus rulez.

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  8. Hi Sgdividends,

    Very interesting topic here LOL! I'm not very smart, but can you help me to ask her these questions?

    The reason why she choose CIT to value is just random right? Or she likes the business?

    Did she look at CIT's financial statements for analysis?

    Cheers!

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  9. Hi Cheng,

    Don;t think the Sexy VJC girl looked at the financial statments. She just wanted to practise her AP/GP skills and took something to value. Think its bcause she read from a Singapore Blogger that he recently bought some Cambridge shares and he was taking about Islamic finance helping it or something.

    The above article is just based on DCF assuming Dividends are still ongoing and that the company will not collapse, which have to be seen from the financial statements.

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  10. All she used was the IPO prospectus, SGX dividends announcements, and the company website to see the expiry dates of the buildings.

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  11. Hi SGDividends,

    If she had looked at the balance sheet of CIT, she would notice a glaring red flag.

    Total debt more than market capitalization, of which 90% is due by 2009.

    Anyway, is she for real? :D

    Cheng

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  12. Hi Cheng,

    Thanks. We ( not Sexy Victorian) looked at it and indeed there is quite a red flag.

    Thanks for pointing it out. We will write a short post on it =)

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  13. Well I seriously enjoy reading. I would like to say that beating the market is not easy way. In fact, it’s very, very hard. So please do safe your investment side.

    best dividend stocks Singapore

    ReplyDelete