Hang on to the Eastern Wind

"Eastern Directories Pte Ltd has signed a non-binding Letter of Intent with SPH to dispose off selected media assets, namely, the IT Show, Comex, Food and Beverage Fair and the World Food Fair.

This transaction is expected to have a material financial impact on the Company."

In a previous post (The Sun rises from the East), MYOB has conservatively valued the entire business at $20 million, based on a generous ROI of 10%. SPH paid $7.1 million to take over Hardwarezone, an regional online media portal with a magazine business.

For FY06/07, Eastern's revenue from the sale of exhibition space was $8.05 million. A rough estimate would value the deal with SPH at $8-10 million.

Management has said that the media business was a cash cow that would provide the company with a solid base to work through good times, and bad. Management would have to justify their move. Perhaps the MICE space is getting too competitive.

We'll have to wait for more details, and more importantly, the price that SPH is paying.

The Sun rises from the East

Eastern Holdings (EH)

Eastern Holdings, traditionally a publishing/marketing business, diversified into the property business three years ago - right when the market started to turn up.

Media

The traditional media business churns along nicely, with focuses in Print, Electronic Media & Marketing Services. The magazine segment is rather ewll-established. Noteable titles are Motherhood, Motoring, Traveller, Teens & Golf. They are also in the exhibition business - the recent Comex is organised by EH.

Some numbers (FY 06/07)
Advertising income $9.76 million
Sale of exhibition sale $8.05 million
Subscription fees $1.21 million

Revenue $19.02 million
Net Profit $2.08 million
Net profit margin - 10.9%

Valuing the fat cash cow media business at $20 million.

Property development

Now, what is more exciting is the property development/investment segment. EH just secured a enbloc deal and acquired a good landbank at Holland.

Loyang Terrace - 999 years leasehold @ $12.5million

- Total land size 23,158 sq ft, Total permissible gross floor area 32,421 sq ft

Even at a reasonable $900psf, NP = $13 million

Grove Drive 81 +83

- freehold land @ combined price of $22.8 million

- Total land size 20,457 sq ft, Total permissible gross floor area 42,387 sq ft, no DC charge

At a reasonable $1400psf, NP = $30 million

D'Evelyn @ 18 Evelyn Road

- 5 storey with 24 Apartment Units with total gfa of 30,767 sq ft

- Having achieved a record $1583psf, total NP = ~$25 million(?)

Property investment

EPL Building @ Lower Delta Road
- 4 storey building; Reitable for $25 million, that's about $20 million above book.

70% interest in 39 Mactaggart Road purchased for $5m in April 2007.
70% interest in 12/14 Hoy Fatt Road purchased for $6.2m in May 2007.
51 Neil Road for $3.2million in Aug 2007.
Say a conservative $3 million net profit.

40, 51, 53, 55, 57, 71 Tras Street (estimated 22,500 sq ft in total)
- Average costs less than $480psf, market rate $1050psf.
- Tenated out at the moment but management has indicated these will be sold at anytime when the price is right for capital gains.
- Excluding the rental income, NP of $12.8 million based on profit of $570psf

110/111 Amoy Street - 12,540sq ft @ $4.7m on April 2007
- Average cost at $344psf, market rate $1050psf.
- NP of $8.9 million

87/88 Amoy Street
- sold for $14.1 million in May 07.
- NP of $7 million

9 Apartment units in Zhuhai, China - 450 sq m

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
For a quick back of the envelope calculation
Media business at $20 million
Loyang Terrace $13 million
81/83 Grove Drive $30 million
D'Evelyn $25 million
40, 51, 53, 55, 57, 71 Tras Street $12.8 million
39 Mactaggart Road, 12/14 Hoy Fatt Road & 51 Neil Road $3 million
EPL Building $20 million
87/88 Amoy Street $7 million
110/111 Amoy Street $8.9 million

Total: $139.7 million!!!
Current Market Cap (on 13 Sep) = $83 million

What I like too:

About 36.35% of the issused ordinary shares of the Company is held by the public.
Top 20 shareholders hold 75.71% of the Company.

Make it your business?