Asian property research and analysis, DimSum Property

Kang Ho Chong

Asian property research and analysis

DimSum Property

Established in Singapore, DimSum Property is a private fund-raising platform with an investment focus across the entire real estate value chain, designed to connect real estate players to investors, built on proprietary and well-researched content, and driven by fin-tech innovations.

Our research articles are written by the DimSum Property Research Team led by co-founder Kang-Ho Chong.

Thematic (Sector/Industry)

Bid to win, or bid to try your luck...Developers often enter into land bids with different strategies. They may aggressively “bid to win”, especially when their landbank has been depleted. Other times, they may choose to bid low, just to try their luck, hoping that no one else bids above them. Very often, these strategies will lead to different outcomes for their profit margins.<ul><li>Land is the most basic and important ingredient in a development project. In Asia, as land that is zoned for property development becomes more scarce, we see developers competing more and more aggressively for  land parcels, hence driving up land prices.</li><li>Given its relatively transparent and public data-rich land bidding system, we have chosen the Singapore land market as a case study to analyse and understand developers’ behaviours when they bid for land.  </li><li>Our model (between 2007-2016) suggests that since 2016, developers operating in Singapore have been finding it hard to win land parcels, due to greater competition for land. Combined with the pressing need to replenish their depleting landbank, many developers strategized to go all out to win in their land bids.</li><li>These aggressive bids have led to higher land costs and lower profit margins for developers, especially in an environment of falling home prices. We estimate net margins fell to ~15% in 2015, down from 22-36% in 2009-12. We expect them to continue lowering to single digits in 2016-17E.</li><li>Even in the face of a potential margin squeeze, many developers are still jumping in to bid for land, as they seek to fulfil “non-profit driven” strategies such as the need to restock, deploy cash, gain market share, or protect the value of a nearby land which they previously acquired.</li></ul>

Bid to win, or bid to try your luck...Developers often enter into land bids with different strategies. They may aggressively “bid to win”, especially when their landbank has been depleted. Other times, they may choose to bid low, just to try their luck, hoping that no one else bids above them. Very often, these strategies will lead to different outcomes for their profit margins.Land is the most basic and important ingredient in a development project. In Asia, as land that is zoned for property development becomes more scarce, we see developers competing more and more aggressively for  land parcels, hence driving up land prices.Given its relatively transparent and public data-rich land bidding system, we have chosen the Singapore land market as a case study to analyse and understand developers’ behaviours when they bid for land.  Our model (between 2007-2016) suggests that since 2016, developers operating in Singapore have been finding it hard to win land parcels, due to greater competition for land. Combined with the pressing need to replenish their depleting landbank, many developers strategized to go all out to win in their land bids.These aggressive bids have led to higher land costs and lower profit margins for developers, especially in an environment of falling home prices. We estimate net margins fell to ~15% in 2015, down from 22-36% in 2009-12. We expect them to continue lowering to single digits in 2016-17E.Even in the face of a potential margin squeeze, many developers are still jumping in to bid for land, as they seek to fulfil “non-profit driven” strategies such as the need to restock, deploy cash, gain market share, or protect the value of a nearby land which they previously acquired.

Land Market – Bid to Win, or Bid to Try Your Luck?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>There are a bunch of stocks that have underperformed the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> and their peers and could be deleted from global passive portfolios in May.</li>
<li>The deletion from passive portfolios will lead to a liquidity event at the end of May where passive trackers will need to sell multiple days of ADV.</li>
<li>Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.</li>
</ul>


There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in May.
The deletion from passive portfolios will lead to a liquidity event at the end of May where passive trackers will need to sell multiple days of ADV.
Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.


Japan - Increase in Shorts & Potential Passive Selling in May

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/activia-properties-inc" target="_blank" data-smartkarma-citation="entities:9498:1" rel="noopener">Activia Properties (3279 JP)</a> announced results Wednesday. Higher DPU on better rental income looks to continue next period, but an asset disposal will produce some drag ahead.</li>
<li>Activia Properties also announced a buyback of 10% of ADV for the next four months.</li>
<li>The REIT is slightly cheap to peers. Yield spread to JGBs is high which is good. It needs to be 10% higher to restart accretive equity offerings.</li>
</ul>



Activia Properties (3279 JP) announced results Wednesday. Higher DPU on better rental income looks to continue next period, but an asset disposal will produce some drag ahead.
Activia Properties also announced a buyback of 10% of ADV for the next four months.
The REIT is slightly cheap to peers. Yield spread to JGBs is high which is good. It needs to be 10% higher to restart accretive equity offerings.


Activia Properties (3279) - Short-Term Higher-Impact Buyback on Better Fundamental Results

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads - <a href="https://www.smartkarma.com/entities/111-inc" target="_blank" data-smartkarma-citation="entities:27412:1" rel="noopener">111 Inc (YI US)</a>, <a href="https://www.smartkarma.com/entities/eoflow-co-ltd" target="_blank" data-smartkarma-citation="entities:36100:1" rel="noopener">Eoflow (294090 KS)</a>, <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a>, <a href="https://www.smartkarma.com/entities/symbio-holdings-ltd" target="_blank" data-smartkarma-citation="entities:20292:1" rel="noopener">Symbio Holdings (SYM AU)</a>, <a href="https://www.smartkarma.com/entities/jsr-corp" target="_blank" data-smartkarma-citation="entities:17620:1" rel="noopener">JSR Corp (4185 JP)</a>, <a href="https://www.smartkarma.com/entities/healius-ltd-6d4d947d-ad32-4aea-b2d8-265f5768b55e" target="_blank" data-smartkarma-citation="entities:14208:1" rel="noopener">Healius (HLS AU)</a>, Haitong International.</li>
<li>Lowest spreads - <a href="https://www.smartkarma.com/entities/pact-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:692:1" rel="noopener">Pact Group Holdings (PGH AU)</a>, <a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a>, <a href="https://www.smartkarma.com/entities/chindata-group-holdings-adr" target="_blank" data-smartkarma-citation="entities:29274:1" rel="noopener">Chindata Group (CD US)</a>, <a href="https://www.smartkarma.com/entities/allkem-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Allkem Ltd (AKE AU)</a>, <a href="https://www.smartkarma.com/entities/t-k-toka-co-ltd" target="_blank" data-smartkarma-citation="entities:18678:1" rel="noopener">T&amp;K Toka Co Ltd (4636 JP)</a>, <a href="https://www.smartkarma.com/entities/azure-minerals-ltd" target="_blank" data-smartkarma-citation="entities:16538:1" rel="noopener">Azure Minerals (AZS AU)</a>. </li>
</ul>


We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads - 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), Symbio Holdings (SYM AU), JSR Corp (4185 JP), Healius (HLS AU), Haitong International.
Lowest spreads - Pact Group Holdings (PGH AU), Origin Energy (ORG AU), Chindata Group (CD US), Allkem Ltd (AKE AU), T&amp;K Toka Co Ltd (4636 JP), Azure Minerals (AZS AU). 


Merger Arb Mondays (30 Oct) - JSR, Eoflow, Azure Minerals, Symbio, Hollysys, Haitong Intl

<ul>
<li>The merger between <a href="https://www.smartkarma.com/entities/kenedix-office-investment-co" target="_blank" data-smartkarma-citation="entities:16263:1" rel="noopener">Kenedix Office Investment Co (8972 JP)</a>, <a href="https://www.smartkarma.com/entities/kenedix-retail-reit-corp" target="_blank" data-smartkarma-citation="entities:188:1" rel="noopener">Kenedix Retail REIT (3453 JP)</a>, and <a href="https://www.smartkarma.com/entities/kenedix-residential-investment" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Investment (3278 JP)</a> is done. Newco starts trading this week as KDX.</li>
<li>The trade was fine until I wrote 9 days ago there was still room to run. It fell the next day, bounced 3%, then got CRUSHED into the index upweight.</li>
<li>NEWREIT is now as cheap relative to its Pro-Forma Peer Group as it was at announcement.</li>
</ul>


The merger between Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) is done. Newco starts trading this week as KDX.
The trade was fine until I wrote 9 days ago there was still room to run. It fell the next day, bounced 3%, then got CRUSHED into the index upweight.
NEWREIT is now as cheap relative to its Pro-Forma Peer Group as it was at announcement.


KDX (8972) - The Kenedix REIT Merger After a Disastrous Index Inclusion Trade

Japan

KDX Realty Investment Corporation operates a real estate investment trust company. The Company invests in office and residential buildings. KDX Realty Investment provides its services throughout Japan.

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KDX Realty Investment (8972 JP)

Land Market – Bid to Win, or Bid to Try Your Luck?

Bid to win, or bid to try your luck...Developers often enter into land bids with different strategies. They may aggressively “bid to win”,...

DimSum Property

Japan - Increase in Shorts & Potential Passive Selling in May

There are a bunch of stocks in Japan that could be sold by passive global investors in May. Shorts have increased on all stocks and the extent of...

Brian Freitas

Activia Properties (3279) - Short-Term Higher-Impact Buyback on Better Fundamental Results

Activia Properties had good results to November 2023. A large disposal at a loss will drag May earnings down while rental gains will offset. The J...

Travis Lundy

Merger Arb Mondays (30 Oct) - JSR, Eoflow, Azure Minerals, Symbio, Hollysys, Haitong Intl

This week, the highest gross spreads are 111 (71.8%), Eoflow (38.2%), Hollysys (22.4%), Symbio (10.1%), JSR (9.3%), Healius (8.9%), Haitong Intl...

Arun George

KDX (8972) - The Kenedix REIT Merger After a Disastrous Index Inclusion Trade

The Kenedix REIT 3-way merger promised strong demand on an index upweight, and bigger size suggested higher valuations. We got the demand, but a...

Travis Lundy

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