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Post by psolhawk on Aug 14, 2014 11:18:26 GMT 7
My gut feel is that he is using the company to train up his son to excel and survive in this world. When I am ready, I wish to do things in a similar fashion as well. To train my children to be their own boss and to control their destiny in an increasingly competitive world.
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Post by oldman on Aug 14, 2014 14:49:03 GMT 7
I met his son a few years ago. Well brought up and pretty sharp as well. Yes, it is every father's dream to have their kids follow them in their business.  My gut feel is that he is using the company to train up his son to excel and survive in this world. When I am ready, I wish to do things in a similar fashion as well. To train my children to be their own boss and to control their destiny in an increasingly competitive world. |
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Post by oldman on Aug 21, 2014 16:34:15 GMT 7
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Post by psolhawk on Aug 21, 2014 17:06:31 GMT 7
It could be a good thing if they have problems driving high occupancy to hit desired profit level. I feel that because Tune Hotels is a joint venture, there is less onus on Plato Capital to report on such matters. Not sure if I am wrong on this.
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Post by oldman on Aug 21, 2014 18:07:09 GMT 7
I feel the same way too. However, as it is a core business, even if it is under a JV, they should keep shareholders updated. I know that sometimes management rather keep a low public profile until they are ready to bang the gong. It could be a good thing if they have problems driving high occupancy to hit desired profit level. I feel that because Tune Hotels is a joint venture, there is less onus on Plato Capital to report on such matters. Not sure if I am wrong on this. |
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Post by psolhawk on Feb 10, 2015 6:54:55 GMT 7
Eagerly waiting for the final year results. |
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Post by web on Feb 25, 2015 10:31:49 GMT 7
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Post by oldman on Feb 28, 2015 7:30:29 GMT 7
Poor set of results. Comprehensive loss of $7.23 mil as compared to a loss of $2.75 mil the year before.
The losses are mainly due to:
1. fair value loss on the investment property of $4.655 mil ( Wisma Char Yong in KL. Surprised that the entire property is now valued at S$4 mil)
2. loss from JV of $611K compared to profit of $3.6 mil the year before (Tune Hotel JV. The hotel operations under the joint venture is near to breakeven level in 12M2014 after the opening of the joint venture’s latest hotel in KLIA2 in May 2014 and a full twelve months of operations for the joint venture’s Melbourne hotel which opened in November 2013)
3. loss from associates of $191K (The share of loss from associates of S$0.191 million in 12M2014 was the result of off-setting the Group’s share of profit of S$1.326 million from TYK Capital Sdn Bhd (“TYKC”), with its share of loss from EDUC8 of S$1.517 million. The profit registered by TYKC’s group of companies in 12M2014 was mainly attributable to the turnaround of its hard disk drives manufacturing operations. The loss registered by EDUC8 in 12M2014 was mainly due to pre-operating costs from January 2014 to September 2014 as well as high operating cost incurred when Epsom College commenced operations in the last quarter of 12M2014)
4. impairment of available for sale financial assets of $648K ( investment in unquoted available-for-sale financial assets of a subsidiary of the Group, based on an assessment conducted by the directors during 12M2014)
5. finance costs of $768K (on borrowings of $6.054 mil)
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Although the Group had a negative working capital of S$4.151 million as at 31 December 2014, the Directors are of the view that the Group will have continued access to banking facilities made available to the Group supported by Mr Lim KianOnn (“Mr LKO”) as guarantor to those facilities. Mr LKO has committed to the Group to continue to provide and not withdraw such personal guarantees so as to enable the Group to have continuous access to these banking facilities. Further to that, the Directors are of the view that the Group will be able to secure additional borrowings by securing its long-term assets which are currently unencumbered.
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HDD Sector
The HDD market bucked the trend of previous years posting a year-on-year volume growth of 2.2% in 2014 as desktop, mobile and consumer electronic HDD sales exceeded earlier expectations driven primarily by 1H2014’s XP and new gaming console refresh. Since then, sales for both client (desktop and mobile) and consumer electronic HDD have softened, and these driving factors are expected to have less of an impact in 2015. In line with the industry’s sentiments, we anticipate a continued turnaround of TYKC’s performance in the next reporting period to be driven primarily by TYKC’s management’s cost savings initiatives and improvement in its manufacturing processes.
To protect itself from the on-going volatility of HDD demand, TYKC will continue to focus its efforts on diversifying their precision engineering activities to cater to other areas such as automotive, oil and gas, and other consumer electronic products.
Hospitality Sector
With the opening of TPRE’s latest hotel at the new KLIA2 airport in FY2014, all three hotels under the Group’s investment in the hospitality sector vide its 50% stake in TPRE are operational (one in Edinburgh United Kingdom, one in Melbourne Australia and one in Sepang Malaysia). The Group would be able to see the full year contribution for all three hotels in FY2015.
Over the next 12 months, the Group expects improvement in the portfolio’s returns as the occupancy level stabilises. Management remains optimistic on the portfolio’s growth driven by improvement in the distribution channel in both the online and offline markets.
The Group is also looking to expand its hospitality portfolio through the Group’s property in Dublin, Ireland in light of recovery of Dublin’s hospitality sector.
Commercial Real Estate Portfolio
The office market in Kuala Lumpur remains soft as supply continues to exceed demand for the foreseeable future. Given the impending influx of prime office space available in the market, older buildings may continually lose tenants to newer buildings and are likely to require extensive renovations or be converted to other uses such as hotels or hostels to remain competitive from an investment standpoint.
IT
For 2015, the slump in oil prices coupled with higher cost of imports caused by a strong USD is expected to dampen overall business sentiment and delay investment decisions. However, this may be compensated in a small way by local initiatives like the implementation of Goods and Services Tax by the Malaysian government which will see SME’s investing in GST compliant software. Although the job market has cooled off slightly, candidates for jobs are still hard to come by and we will continue to rely on contract staff and third party service providers to complete our jobs on time.
Education
The Group’s interest in the education sector through its investment in EDUC8 is not anticipated to be profitable in the immediate future but is revenue generating after the recent opening of the Epsom College in Malaysia campus in September 2014. Immediate priorities for management lie in driving student enrolment through marketing and increasing awareness to leverage on interest around the region in the British boarding school experience and curriculum. The Group also continues to look at other opportunities to establish Epsom branded schools across the region.
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Post by web on Feb 28, 2015 10:33:24 GMT 7
Dear Oldman,
Thank you for highlighting Plato as an example for new value investors to learn the ropes. I have taken interest in Plato as it provides me the learning opportunity. I have no vested interest in Plato but am keen to find out why this stock is attractive to you and other value investors. Reading your recent posts here, the old posts at shareinvestor.com and other sources of information from the public domain still baffles me but I take note that you have said it loud and clear that one of the key reasons you invested or remain invested in Plato is because of top entrepreneur Lim Kian Onn. Also, I understand and respect your difficulty to discuss about Plato because you have a substantial stake in it and cannot show your cards.
I do have a question on how Wisma Char Yong is recorded in Plato's book. This is more about understanding the account and explaining it probably does not in any way reveal your cards. Nonetheless, if my assumption is wrong, please simply ignore my question.
From Plato's announcement dated 4 November 2011, it was stated clearly that Wisma Char Yong and six lots of adjoining vacant freehold land cost RM10.6m or $4.26m. Plato’s 70% stake was RM7.42 or $2.98m. The six lots of adjoining vacant freehold land were sold in February 2013 for RM10.0m or $3.74m (Page 74 of 86 on FY12 Annual Report and Page 61 of 110 ofFY13 Annual Report). In fact the sales of the 6 plots freehold land already paid for the total cost of the 6 plots of land plus Wisma Cha Yong, so Plato's subsidiary gets Wisma Char Yong for free. Is my interpretation correct?
What puzzles me is, apart from being recorded as investment property, there is also a finance lease associated with Wisma Char Yong that is detailed on Page 61 of 86 in the FY12 Annual Report and Page 77 of 110 of FY13 Annual Report. The total minimum lease for the remaining 58 years is recorded as about $23.8m and the present value of minimum lease payments of about $3.6m is listed under non-current liabilities as Finance Lease Payables. What is this all about?
BTW, could the lower valuation of Wisma Char Yong be due to the property valuator took into consideration that there had been no leasing income for the property and hence no cash flow? The valuation is affected when discounted cash flow is used as part of the valuation method.
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Post by oldman on Feb 28, 2015 13:08:39 GMT 7
Yes, the bulk of the losses was due to the write down in the value of Wisma Char Yong. You are correct in your assessment. Wisma Char Yong is essentially free but the company had reassessed its value upwards before and now, it is taking it downwards. I too was confused with the finance lease payable and after some discussions, my understanding is that one should ignore those numbers. Even so, I tend to agree with you that it may be one of the reasons the valuation of Wisma Char Yong was reduced. Saying all that, I am still a long term shareholder as I don't think much has changed. What is good is that the Tune Hotel JV appear to be breaking even, TYK Capital is doing OK and the main drain appears to be from the startup costs of EDUC8. Guess, one has to be even more patient with this company. Dear Oldman, Thank you for highlighting Plato as an example for new value investors to learn the ropes. I have taken interest in Plato as it provides me the learning opportunity. I have no vested interest in Plato but am keen to find out why this stock is attractive to you and other value investors. Reading your recent posts here, the old posts at shareinvestor.com and other sources of information from the public domain still baffles me but I take note that you have said it loud and clear that one of the key reasons you invested or remain invested in Plato is because of top entrepreneur Lim Kian Onn. Also, I understand and respect your difficulty to discuss about Plato because you have a substantial stake in it and cannot show your cards. I do have a question on how Wisma Char Yong is recorded in Plato's book. This is more about understanding the account and explaining it probably does not in any way reveal your cards. Nonetheless, if my assumption is wrong, please simply ignore my question. From Plato's announcement dated 4 November 2011, it was stated clearly that Wisma Char Yong and six lots of adjoining vacant freehold land cost RM10.6m or $4.26m. Plato’s 70% stake was RM7.42 or $2.98m. The six lots of adjoining vacant freehold land were sold in February 2013 for RM10.0m or $3.74m (Page 74 of 86 on FY12 Annual Report and Page 61 of 110 ofFY13 Annual Report). In fact the sales of the 6 plots freehold land already paid for the total cost of the 6 plots of land plus Wisma Cha Yong, so Plato's subsidiary gets Wisma Char Yong for free. Is my interpretation correct? What puzzles me is, apart from being recorded as investment property, there is also a finance lease associated with Wisma Char Yong that is detailed on Page 61 of 86 in the FY12 Annual Report and Page 77 of 110 of FY13 Annual Report. The total minimum lease for the remaining 58 years is recorded as about $23.8m and the present value of minimum lease payments of about $3.6m is listed under non-current liabilities as Finance Lease Payables. What is this all about? BTW, could the lower valuation of Wisma Char Yong be due to the property valuator took into consideration that there had been no leasing income for the property and hence no cash flow? The valuation is affected when discounted cash flow is used as part of the valuation method. |
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Post by web on Feb 28, 2015 16:28:26 GMT 7
Thank you for your quick response and guidance. It is well appreciated. I agree that the number on the financial lease part is not so critical to an investor's valuation of Plato. It could be that by accounting it that way, they could book interest expense for the financial lease and hence reduce the profit and therefore tax payable (just a wild guess). BTW, I found some useful information on Tune Hotels at www.skyscrapercity.com/showthread.php?t=384029, which you probably already know. |
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Post by sptl123 on Feb 28, 2015 16:43:24 GMT 7
Yes, the bulk of the losses was due to the write down in the value of Wisma Char Yong. You are correct in your assessment. Wisma Char Yong is essentially free but the company had reassessed its value upwards before and now, it is taking it downwards. I too was confused with the finance lease payable and after some discussions, my understanding is that one should ignore those numbers. Even so, I tend to agree with you that it may be one of the reasons the valuation of Wisma Char Yong was reduced. Saying all that, I am still a long term shareholder as I don't think much has changed. What is good is that the Tune Hotel JV appear to be breaking even, TYK Capital is doing OK and the main drain appears to be from the startup costs of EDUC8. Guess, one has to be even more patient with this company. Oldman, From the report, one third of the SHF already burned. Revenue is little and has negative income from investments. I repeatedly read the report and could not answer myself. What is the value for investing in this company? Does it still have the profile for a value investor to invest in? Does it have any future? Is it probable or possible for Plato Capital to turn around in the next 2-3 years ? I am asking questions in order to learn. I do not have any disrespect but in the process of asking I might sounded so and I am sorry if i do. |
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Post by oldman on Feb 28, 2015 18:39:28 GMT 7
Sptl123, I agree that Plato Capital as is, is really not that attractive from a value perspective. There are lots of other more attractive companies to invest in. But, as I have invested in this some time back, I have decided to keep my patience with this company and its management. However, if I have the benefit of hindsight, I would be better investing my money elsewhere. Such is the risk of fundamental investing. One has to trust that management is honest and will do all that is necessary to turn around the company. One will never know if he is riding a winner or a dud until years down the road. Yes, the bulk of the losses was due to the write down in the value of Wisma Char Yong. You are correct in your assessment. Wisma Char Yong is essentially free but the company had reassessed its value upwards before and now, it is taking it downwards. I too was confused with the finance lease payable and after some discussions, my understanding is that one should ignore those numbers. Even so, I tend to agree with you that it may be one of the reasons the valuation of Wisma Char Yong was reduced. Saying all that, I am still a long term shareholder as I don't think much has changed. What is good is that the Tune Hotel JV appear to be breaking even, TYK Capital is doing OK and the main drain appears to be from the startup costs of EDUC8. Guess, one has to be even more patient with this company. Oldman, From the report, one third of the SHF already burned. Revenue is little and has negative income from investments. I repeatedly read the report and could not answer myself. What is the value for investing in this company? Does it still have the profile for a value investor to invest in? Does it have any future? Is it probable or possible for Plato Capital to turn around in the next 2-3 years ? I am asking questions in order to learn. I do not have any disrespect but in the process of asking I might sounded so and I am sorry if i do. |
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Post by psolhawk on Mar 1, 2015 7:32:54 GMT 7
Few things of interest:
1. Sounds like they are going to reposition Wisma Char Yong for tourist accomodation. If so, I believe that is excellent thinking on the management part.
2. The rate of breakeven for Tune Hotels is very impressive.
3. One questions the value proposition. I propose that there are 3 turnaround stories at work here. Since 2 FYs ago, Tune Hotels were still a drag. Now, Tune is poised to contribute well to bottomline from this FY. The HDD story has already turned itself around so nothing more to add. Educ8 will take longer as I believe startup cost is invariably higher (land, buildings, salaries etc) and management is focused on getting maximum enrolment (a figure which I tried to obtain but couldnt). In fact I like to think that Plato will not fly in the next few years still as the drag on profits by Educ8 will be pretty significant. However, I wont be too worried as I believe Educ8 has the right management to make it work. I just hope that Epsom college does not strive to expand before we get a good sense of how profitable it is. Seeing how well received boarding schools are in Singapore, I hope Epsom College is going to do well in Malaysia, a country where quality education is still much sought after.
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Post by oldman on Mar 1, 2015 9:23:34 GMT 7
Psolhawk, my goodness. We do think alike. I think that management is after capital gains so I will not be surprised that at the right price, they will sell both the Tune Hotel JV as well as the HDD business. I also think that Euc8 will not take that long to turn around. Yes, patience is still required..... and of course, trust in management. ------------ Hospitality Sector
With the opening of TPRE’s latest hotel at the new KLIA2 airport in FY2014, all three hotels under the Group’s investment in the hospitality sector vide its 50% stake in TPRE are operational (one in Edinburgh United Kingdom, one in Melbourne Australia and one in Sepang Malaysia). The Group would be able to see the full year contribution for all three hotels in FY2015. Over the next 12 months, the Group expects improvement in the portfolio’s returns as the occupancy level stabilises. Management remains optimistic on the portfolio’s growth driven by improvement in the distribution channel in both the online and offline markets. The Group is also looking to expand its hospitality portfolio through the Group’s property in Dublin, Ireland in light of recovery of Dublin’s hospitality sector. Commercial Real Estate PortfolioThe office market in Kuala Lumpur remains soft as supply continues to exceed demand for the foreseeable future. Given the impending influx of prime office space available in the market, older buildings may continually lose tenants to newer buildings and are likely to require extensive renovations or be converted to other uses such as hotels or hostels to remain competitive from an investment standpoint. Few things of interest: 1. Sounds like they are going to reposition Wisma Char Yong for tourist accomodation. If so, I believe that is excellent thinking on the management part. 2. The rate of breakeven for Tune Hotels is very impressive. 3. One questions the value proposition. I propose that there are 3 turnaround stories at work here. Since 2 FYs ago, Tune Hotels were still a drag. Now, Tune is poised to contribute well to bottomline from this FY. The HDD story has already turned itself around so nothing more to add. Educ8 will take longer as I believe startup cost is invariably higher (land, buildings, salaries etc) and management is focused on getting maximum enrolment (a figure which I tried to obtain but couldnt). In fact I like to think that Plato will not fly in the next few years still as the drag on profits by Educ8 will be pretty significant. However, I wont be too worried as I believe Educ8 has the right management to make it work. I just hope that Epsom college does not strive to expand before we get a good sense of how profitable it is. Seeing how well received boarding schools are in Singapore, I hope Epsom College is going to do well in Malaysia, a country where quality education is still much sought after. |
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