SGD New Issue Review : Singhaiyi Group 2.5Y SGD Bond

Issuer: SingHaiyi Group Ltd.
Status:  Senior, unsecured
Rating:  Unrated
Format: Reg S, Bearer, S274 & 275 of Singapore SFA,  issued off the SGD500m Multicurrency Debt Issuance Programme
Tenor: 2.5 years
Issue Size: TBD
Issue Date: [ ] July 2014
Maturity Date: [ ] January 2017
Payment: Semi-annual, Actual/365 (fixed)
Redemption at the Option of Noteholders upon Cessation or
Suspension of Trading of the Issuer’s Shares:
At par, in accordance with the Programme
Redemption forTaxation Reasons:
Yes, in accordance with the Programme
Redemption at the Option of Noteholders Pursuant to Change of Shareholding Event:
At par, in accordance with the Programme Details:
SGD250k denoms / Singapore Law/ CDP / SGX-ST

New SingHaiyi SGD 2.5yrs announced, deal is well anchored
–          Initial price guidance: Mid 5s

TA CORP  5.25% 10/ 2016 at 100.75, 4.90%
KOH BROTHERS 4.8%  01/2018 at 100.95, 4.50%
TIONG SENG 4.75% 01/2018 at 100.350, 4.64%

Credit Highlights:

–          SingHaiyi and its subsidiaries (collectively the “Group”) specialise in property development, property investment, property management and mall ownership and operations and its core businesses in property development and property investment are primarily carried out in Singapore, U.S. and Hong Kong.
–          The Group has invested in three real estate projects in the U.S., namely, a shopping mall known as Tri-County Mall in Cincinnati, Ohio, a commercial condominium project known as Vietnam Town in San Jose, State of  California and a development project at 5 Thomas Mellon in San Francisco, State of California. The Group’s expansion into the U.S. was aided by the experience, business contacts and expertise of the Group’s management in relation to investments in the U.S.. In particular, the Group has a right of first refusal (ROFR) in respect of any property investments encountered by its controlling shareholders’ private investment vehicle in the U.S. – American Pacific International Capital (APIC). This ROFR arrangement avoids conflict of interests via obtaining approval from non-executive and independent directors for any potential investments opportunities.
–          The Group has various investments in Singapore, the U.S. and Hong Kong, which includes TripleOne Somerset in Singapore, Tri-County Mall in Ohio and 5 Thomas Mellon in San Francisco.
–          The Group and its partners are currently developing four residential property projects in Singapore (Pasir Ris One, CityLife @Tampines, The CosmoLoft and Anchorvale Crescent) and one commercial property project (Vietnam Town) in U.S. These projects, inclusive of the completed Charlton Residences, had a combined gross development value of approximately S$1.4 billion as at 31 March 2014.

Mid cap name ? SGD 500 mio market cap.

But guess who is the chairman ??
…………NEIL BUSH, son and brother of 2 former US Presidents. (Note the spike in share price around Mar-April last year when he was appointed)

No analyst coverage of this company except for a small little known shop, EVA Dimensions, who called for a SELL in April this year.

Except for a gap in their accounts between 2009 and 2012, the company seems to be on an expansion path with forays into the US property market with 3 projects so far.

With a SGD 500 mio MTN programme set up, we can expect a rapid push to expand their unusual market position and profits for a largely family owned operation.

Aggressive expansions and Neil Bush’s announcement that the company is targeting a main board listing would incline me towards its equity than bonds.

Yet mid 5% coupon looks decent until you realise that the company’s pre tax income was just SGD 5.9 mio last year which means that a SGD 100 mio bond issue at 5.5% coupon would take out the entire profit.

Ratios-wise, there is nothing really much to scrutinise given they are at their infant stages of operations. And my opinion is that they are trying to push a bond through at a coupon level that slightly more established companies deserve.

Having said that, the coupon does look appetising in the current market climate given market demand for the past few local corp issues that have banked on name familiarity and they have been active in the local philanthropy scene :

I have their stock on my radar though….