SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

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Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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<p class="gmail-p1">An ethos of stewardship and the pursuit of excellence have always been the cornerstones of life for hospitality real estate veteran Alan Tang.<br><br>
“I’m a firm believer in stewardship and servant leadership, two concepts which are anchored in my Christian faith,” said the Chief Executive Officer of SGX-listed real estate company Far East Orchard Ltd.<br><br>
“Being a steward means taking responsibility for the resources that are entrusted to me – be it capital, human or natural resources. In particular, I’m entrusted to manage the capital of the company wisely, to enhance returns, and build a sustainable business.”<br><br>
The human factor is equally important. “Servant leadership values the people put under my care, with a responsibility to develop them to their fullest potential,” he added. <br><br>
“I believe in building a company with sustainable profits and highly motivated staff for the purpose of giving back, which then allows the business to fulfil its corporate social responsibility meaningfully.”<br><br>
A Bachelor of Science with Distinction graduate from Cornell University’s School of Hotel Administration and a Chartered Financial Analyst, Tang has broad experience in the global hospitality real estate capital market and operations. He was appointed Group CEO of Far East Orchard in January 2020. <br><br>
His previous roles included Senior Vice President, Head Hospitality of GIC Real Estate Pte Ltd, where he was responsible for investment and asset management of a multi-billion-dollar portfolio, and Chief Operating Officer of Frasers Hospitality International Pte Ltd, where he led the global operations of its hotels and serviced apartments.<br><br>
“In terms of achievements, the most memorable was my role in starting the hospitality portfolio in GIC Real Estate,” Tang recalled. <br><br>
“I also look back with much gratitude on my involvement in acquiring some of the finest hotel properties around the world, such as Browns Hotel in London, Hotel Vier Jahreszeiten in Hamburg, Westin Sydney, Westin Tokyo, and the InterContinental Hotel Paris, which was rebranded Westin Paris.”<br><br>
This relentless pursuit of quality is also a key element of the corporate culture that Tang is building in Far East Orchard. “As a real estate developer and operator, it falls on us to embody this spirit of excellence in the various types of lodging that we provide for our customers,” he pointed out.<br><br>
“Whether they are students, holidaymakers or business travellers, we must provide excellence in all aspects of our services, to ensure that our guests feel welcome and taken care of while under our roof.”<br><br><strong>Transformation Journey</strong><br><br>
Listed on SGX Mainboard since 1968, Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio. <br><br>
A member of Far East Organization, Singapore’s largest private property developer, Far East Orchard redefined itself through a strategic transformation in 2012 by expanding into the businesses of hospitality management and healthcare real estate. In 2015, it further diversified its real estate portfolio to include purpose-built student accommodation (PBSA) properties in the UK. <br><br>
Through its Far East Hospitality arm, the Group owns more than 10 hospitality assets, and manages over 100 properties with more than 16,500 rooms in Denmark, Germany, Hungary, Japan, Australia, New Zealand, Malaysia and Singapore.<br><br>
Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. It also holds a portfolio of purpose-built medical suites for lease and sale in Singapore's premier medical hub in Novena.<br><br>
The Group is well on its transformation journey to build recurring income streams, Tang noted. “Since coming on board, I’ve been crystallising this process into the FEOR 25 strategy, one that anchors on the strength of our PBSA and hospitality businesses,” he said.<br><br>
“Using these two levers, Far East Orchard is building a lodging platform that delivers sustainable returns over the long term, and positions the Group for further expansion beyond 2025.”<br><br>
For the Group’s hospitality operations, it recently crossed a significant milestone with the opening of its 100th hotel – Adina Melbourne Southbank – managed by Toga Far East (TFE) Hotels.<br><br>
Over the course of 2020, and despite the impact of COVID-19, the Group opened a total of approximately 1,300 rooms, half of which took place in the last quarter of the year.<br><br>
“Through Far East Hospitality, we intend to continue growing our recurring income base with hotel management agreements in key cities across the Asia Pacific region – cities such as Australia and Japan that have strong long-term tourism fundamentals, thanks to domestic travel and other demand drivers,” Tang added.<br><br><strong>Resilient Asset Class</strong><br><br>
For its PBSA segment, the Group is looking to deepen its presence in the UK, to build a portfolio with meaningful size and scale. Even amidst the pandemic and Brexit uncertainties, the UK PBSA market has proved to be resilient, Tang pointed out.<br><br>
“University enrolments have grown by 4% for academic year 2020/21 compared to the prior year, driven both by the increase in domestic UK student enrolments as well as that of international students from outside the EU region,” he noted.<br><br>
The Group believes that demand for higher education in the UK will remain steady, as will the desire for a quality on-campus education experience. <br><br>
“Although some aspects of higher learning may move into the online space, we’ve also seen high levels of dissatisfaction with online learning among students – these students are paying significant tuition fees for an educational experience, of which in-person interaction plays an important role,” Tang said.<br><br>
And the Group’s recent acquisition of a third, 301-bed PBSA property in Bristol – which brings its student accommodation portfolio to 3,561 beds across 12 assets in the UK – underscores its commitment to the asset class.<br><br>
“Our focus remains on cities with high-tariff universities, strong student population growth and favourable supply/demand dynamics,” he added.<br><br>
Far East Orchard intends to continue building up its lodging platform in the coming years. It has set a target of achieving 25,000 hotel rooms and 5,000 PBSA beds by 2025, and will achieve this through a combination of operating contracts, strategic partnerships and acquisitions.<br><br>
“Given the challenging global economic and business environment, coupled with a likely extended period of low interest rates, we believe our healthy balance sheet positions us to seize attractive asset acquisition opportunities that fit our strategy,” Tang noted.<br><br>
“We will adopt a disciplined approach in the evaluation of all opportunities in the hospitality and PBSA businesses – our goal is to ensure that the yields from acquired assets meet our objectives for the building of recurring income.”<br><br>
Despite the reasonably bright growth outlook, the year so far has been challenging, not only for Far East Orchard, but all business leaders. <br><br>
“The hospitality industry is facing a crisis unlike any it has ever seen before. We are likely to see a protracted recovery for the industry as the overhang from COVID-19 may continue for quite some time,” Tang said.<br><br>
“But just like in any other crisis, I believe that pockets of opportunity do, and will continue to, exist.”<br><br>
In the meantime, Tang remains focused on prudent capital management, and staying nimble to navigate the recovery of the Group’s various businesses through the coronavirus pandemic.<br><br>
“The doom and gloom will not last forever, and my focus is on resourcing the group appropriately to fulfil our strategic intent of building a lodging platform that is ready to take advantage of post-COVID-19 growth.”<br><br>
When the 55-year-old father is not managing the operations of Far East Orchard, he can be found with his two daughters and son, aged 15 to 24 years.<br><br>
“I want my kids to be good stewards, to aim for the spirit of excellence in all things, and do their best in whatever they are entrusted,” he said. “But at the same time, I tell them that it’s essential to hold everything lightly, so that we can enjoy more peace, and be able to sleep soundly at night.”<br><br><strong>Far East Orchard Ltd</strong></p>

<p>Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio. Listed on SGX Mainboard since 1968, the Group is a member of Far East Organization, Singapore’s largest private property developer. Established since 1967, Far East Orchard has developed residential, commercial, hospitality and PBSA properties in Australia, Malaysia, Singapore and the UK. Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. The Group also holds a portfolio of purpose‐built medical suites for lease and for sale in Singapore's premier medical hub in Novena.<br><br>
Through its hospitality arm Far East Hospitality, Far East Orchard owns more than 10 hospitality assets and manages over 98 properties with more than 16,000 rooms in Australia, Denmark, Germany, Hungary, Malaysia, New Zealand and Singapore. Far East Hospitality made its first joint foray into Japan with Far East Organization in 2018.<br>
 </p>

<p>The company website is: <a href="http://www.fareastorchard.com.sg"><strong>www.fareastorchard.com.sg</strong></a><br>
 </p>

<p>Click <a href="https://www.sgx.com/securities/equities/O10"><strong>here</strong></a> for the company's StockFacts page.<br><br>
For the nine-month period ended 30 September 2020 business update, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/E1E593KEDYXSB41L/638363_FarEastOrchard-Business_Performance_Update.pdf"><strong>here</strong></a>.</p>

<p><br><strong>About kopi-C: the Company brew</strong></p>

<p><strong>Text: Jennifer Tan-Stanisic</strong><br><strong>Photo: Company file</strong><br><br><em>kopi-C </em>is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.<br><br>
For previous editions of <em>kopi-C: the Company brew,</em> please click <a href="https://www.sgx.com/research-education/market-dialogues"><strong>here</strong></a>.  <br><br>
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="jennifer.t@sgx.com"><strong>jennifer.t@sgx.com</strong></a>.</p>

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    FEO-CEO


An ethos of stewardship and the pursuit of excellence have always been the cornerstones of life for hospitality real estate veteran Alan Tang.  
“I’m a firm believer in stewardship and servant leadership, two concepts which are anchored in my Christian faith,” said the Chief Executive Officer of SGX-listed real estate company Far East Orchard Ltd.  
“Being a steward means taking responsibility for the resources that are entrusted to me – be it capital, human or natural resources. In particular, I’m entrusted to manage the capital of the company wisely, to enhance returns, and build a sustainable business.”  
The human factor is equally important. “Servant leadership values the people put under my care, with a responsibility to develop them to their fullest potential,” he added.   
“I believe in building a company with sustainable profits and highly motivated staff for the purpose of giving back, which then allows the business to fulfil its corporate social responsibility meaningfully.”  
A Bachelor of Science with Distinction graduate from Cornell University’s School of Hotel Administration and a Chartered Financial Analyst, Tang has broad experience in the global hospitality real estate capital market and operations. He was appointed Group CEO of Far East Orchard in January 2020.   
His previous roles included Senior Vice President, Head Hospitality of GIC Real Estate Pte Ltd, where he was responsible for investment and asset management of a multi-billion-dollar portfolio, and Chief Operating Officer of Frasers Hospitality International Pte Ltd, where he led the global operations of its hotels and serviced apartments.  
“In terms of achievements, the most memorable was my role in starting the hospitality portfolio in GIC Real Estate,” Tang recalled.   
“I also look back with much gratitude on my involvement in acquiring some of the finest hotel properties around the world, such as Browns Hotel in London, Hotel Vier Jahreszeiten in Hamburg, Westin Sydney, Westin Tokyo, and the InterContinental Hotel Paris, which was rebranded Westin Paris.”  
This relentless pursuit of quality is also a key element of the corporate culture that Tang is building in Far East Orchard. “As a real estate developer and operator, it falls on us to embody this spirit of excellence in the various types of lodging that we provide for our customers,” he pointed out.  
“Whether they are students, holidaymakers or business travellers, we must provide excellence in all aspects of our services, to ensure that our guests feel welcome and taken care of while under our roof.”  Transformation Journey  
Listed on SGX Mainboard since 1968, Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio.   
A member of Far East Organization, Singapore’s largest private property developer, Far East Orchard redefined itself through a strategic transformation in 2012 by expanding into the businesses of hospitality management and healthcare real estate. In 2015, it further diversified its real estate portfolio to include purpose-built student accommodation (PBSA) properties in the UK.   
Through its Far East Hospitality arm, the Group owns more than 10 hospitality assets, and manages over 100 properties with more than 16,500 rooms in Denmark, Germany, Hungary, Japan, Australia, New Zealand, Malaysia and Singapore.  
Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. It also holds a portfolio of purpose-built medical suites for lease and sale in Singapore's premier medical hub in Novena.  
The Group is well on its transformation journey to build recurring income streams, Tang noted. “Since coming on board, I’ve been crystallising this process into the FEOR 25 strategy, one that anchors on the strength of our PBSA and hospitality businesses,” he said.  
“Using these two levers, Far East Orchard is building a lodging platform that delivers sustainable returns over the long term, and positions the Group for further expansion beyond 2025.”  
For the Group’s hospitality operations, it recently crossed a significant milestone with the opening of its 100th hotel – Adina Melbourne Southbank – managed by Toga Far East (TFE) Hotels.  
Over the course of 2020, and despite the impact of COVID-19, the Group opened a total of approximately 1,300 rooms, half of which took place in the last quarter of the year.  
“Through Far East Hospitality, we intend to continue growing our recurring income base with hotel management agreements in key cities across the Asia Pacific region – cities such as Australia and Japan that have strong long-term tourism fundamentals, thanks to domestic travel and other demand drivers,” Tang added.  Resilient Asset Class  
For its PBSA segment, the Group is looking to deepen its presence in the UK, to build a portfolio with meaningful size and scale. Even amidst the pandemic and Brexit uncertainties, the UK PBSA market has proved to be resilient, Tang pointed out.  
“University enrolments have grown by 4% for academic year 2020/21 compared to the prior year, driven both by the increase in domestic UK student enrolments as well as that of international students from outside the EU region,” he noted.  
The Group believes that demand for higher education in the UK will remain steady, as will the desire for a quality on-campus education experience.   
“Although some aspects of higher learning may move into the online space, we’ve also seen high levels of dissatisfaction with online learning among students – these students are paying significant tuition fees for an educational experience, of which in-person interaction plays an important role,” Tang said.  
And the Group’s recent acquisition of a third, 301-bed PBSA property in Bristol – which brings its student accommodation portfolio to 3,561 beds across 12 assets in the UK – underscores its commitment to the asset class.  
“Our focus remains on cities with high-tariff universities, strong student population growth and favourable supply/demand dynamics,” he added.  
Far East Orchard intends to continue building up its lodging platform in the coming years. It has set a target of achieving 25,000 hotel rooms and 5,000 PBSA beds by 2025, and will achieve this through a combination of operating contracts, strategic partnerships and acquisitions.  
“Given the challenging global economic and business environment, coupled with a likely extended period of low interest rates, we believe our healthy balance sheet positions us to seize attractive asset acquisition opportunities that fit our strategy,” Tang noted.  
“We will adopt a disciplined approach in the evaluation of all opportunities in the hospitality and PBSA businesses – our goal is to ensure that the yields from acquired assets meet our objectives for the building of recurring income.”  
Despite the reasonably bright growth outlook, the year so far has been challenging, not only for Far East Orchard, but all business leaders.   
“The hospitality industry is facing a crisis unlike any it has ever seen before. We are likely to see a protracted recovery for the industry as the overhang from COVID-19 may continue for quite some time,” Tang said.  
“But just like in any other crisis, I believe that pockets of opportunity do, and will continue to, exist.”  
In the meantime, Tang remains focused on prudent capital management, and staying nimble to navigate the recovery of the Group’s various businesses through the coronavirus pandemic.  
“The doom and gloom will not last forever, and my focus is on resourcing the group appropriately to fulfil our strategic intent of building a lodging platform that is ready to take advantage of post-COVID-19 growth.”  
When the 55-year-old father is not managing the operations of Far East Orchard, he can be found with his two daughters and son, aged 15 to 24 years.  
“I want my kids to be good stewards, to aim for the spirit of excellence in all things, and do their best in whatever they are entrusted,” he said. “But at the same time, I tell them that it’s essential to hold everything lightly, so that we can enjoy more peace, and be able to sleep soundly at night.”  Far East Orchard Ltd

Far East Orchard is a real estate company with a lodging platform that aims to achieve sustainable and recurring income through a diversified and balanced portfolio. Listed on SGX Mainboard since 1968, the Group is a member of Far East Organization, Singapore’s largest private property developer. Established since 1967, Far East Orchard has developed residential, commercial, hospitality and PBSA properties in Australia, Malaysia, Singapore and the UK. Its PBSA portfolio in the UK comprises 3,561 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle upon Tyne and Sheffield. The Group also holds a portfolio of purpose‐built medical suites for lease and for sale in Singapore's premier medical hub in Novena.  
Through its hospitality arm Far East Hospitality, Far East Orchard owns more than 10 hospitality assets and manages over 98 properties with more than 16,000 rooms in Australia, Denmark, Germany, Hungary, Malaysia, New Zealand and Singapore. Far East Hospitality made its first joint foray into Japan with Far East Organization in 2018. 
 

The company website is: www.fareastorchard.com.sg 
 

Click here for the company's StockFacts page.  
For the nine-month period ended 30 September 2020 business update, click here.

 About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.

 



Far East Orchard Eyes Lodging Platform for Growth

<h2>10 Questions for Far East Orchard Limited</h2>
<p><strong>Company Overview</strong><br>Far East Orchard Limited is a property developer, hospitality assets owner and operator, with a diversified property investment portfolio comprising purpose-built student accommodation (PBSA) and medical suites. It has properties in Australia, Malaysia, Singapore and the United Kingdom. It is a member of Far East Organization, Singapore’s largest private property developer. <a href="https://www.sgx.com/securities/equities/O10" target="_blank" rel="noopener">Link to StockFacts company page</a></p>
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<li><strong>The Group’s diversified property portfolio comprises residential, commercial, hospitality, purpose-built student accommodation (PBSA) and medical suites. What would you maintain or change?</strong></li>
</ol>
<ul>
<li>Our strategy for the near to mid-term is to focus on building a lodging platform on the back of our hospitality and PBSA businesses. In 2012, we embarked on a strategic transformation and expanded into hospitality management and healthcare real estate, to generate a sustainable and recurring income stream to augment our property development and investment businesses. In 2015, we further diversified into PBSA properties in the UK. These real estate lodging businesses will be our main priority in the coming years.</li>
<li>Our enlarged base of recurring income from hospitality and the PBSA businesses complement the one-off earnings from property development projects to provide better stability. We aim to continue growing recurring hospitality revenue through operating contracts and strategic partnerships and continue the expansion of the PBSA portfolio through acquisitions or development.</li>
</ul>
<p><strong>2. Describe the Group’s revenue mix and profitability over the past few years.</strong></p>
<ul>
<li>We adopt a diversified strategy to provide earnings stability, and have seen an increased proportion of operating profit from our hospitality and property investment businesses, from 85% in FY2018 to almost 100% in FY2019. Our hospitality segment has been the core contributor to our recurring income base.</li>
<li>Since entering the PBSA sector in 2015, our portfolio has increased by fivefold to over 3,000 beds. This has provided a healthy balance and diversification to the recurring income composition provided by the hospitality business. We see potential to continue the expansion of our PBSA portfolio given the continued growth of both domestic and international student numbers in the United Kingdom (UK), and the resilient nature of this income stream.</li>
</ul>

10 Questions for Far East Orchard Limited
Company Overview Far East Orchard Limited is a property developer, hospitality assets owner and operator, with a diversified property investment portfolio comprising purpose-built student accommodation (PBSA) and medical suites. It has properties in Australia, Malaysia, Singapore and the United Kingdom. It is a member of Far East Organization, Singapore’s largest private property developer. Link to StockFacts company page

The Group’s diversified property portfolio comprises residential, commercial, hospitality, purpose-built student accommodation (PBSA) and medical suites. What would you maintain or change?


Our strategy for the near to mid-term is to focus on building a lodging platform on the back of our hospitality and PBSA businesses. In 2012, we embarked on a strategic transformation and expanded into hospitality management and healthcare real estate, to generate a sustainable and recurring income stream to augment our property development and investment businesses. In 2015, we further diversified into PBSA properties in the UK. These real estate lodging businesses will be our main priority in the coming years.
Our enlarged base of recurring income from hospitality and the PBSA businesses complement the one-off earnings from property development projects to provide better stability. We aim to continue growing recurring hospitality revenue through operating contracts and strategic partnerships and continue the expansion of the PBSA portfolio through acquisitions or development.

2. Describe the Group’s revenue mix and profitability over the past few years.

We adopt a diversified strategy to provide earnings stability, and have seen an increased proportion of operating profit from our hospitality and property investment businesses, from 85% in FY2018 to almost 100% in FY2019. Our hospitality segment has been the core contributor to our recurring income base.
Since entering the PBSA sector in 2015, our portfolio has increased by fivefold to over 3,000 beds. This has provided a healthy balance and diversification to the recurring income composition provided by the hospitality business. We see potential to continue the expansion of our PBSA portfolio given the continued growth of both domestic and international student numbers in the United Kingdom (UK), and the resilient nature of this income stream.


10 in 10 with Far East Orchard - Building A Lodging Platform (27Oct2020)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Back on the 14 August 2020, <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> announced its <a href="https://straitstrading.listedcompany.com/newsroom/20200814_171924_S20_ETSA0B9VKYMLZIBA.2.pdf" target="_blank" rel="noopener">1H20 result</a>s, which showed a 62.9/87.5% decline yoy in EBITDA and EPS, due in part to lower average tin prices and lower sales quantity of refined tin; and the knock on-effects from COVID-19 to its hospitality operations.</p>
<p>Tin prices are up 38% since the March low and 10% since  30 June. There are signs of life in the hospitality front, with talk of bubble travel between countries, which <em>may</em> indicate operational losses have troughed.</p>
<p>But of more interest is STR's 22.06% stake in ARA Asset Management. STR added 1.1% in <a href="https://links.sgx.com/FileOpen/R706A%20Announcement.ashx?App=Announcement&amp;FileID=627835" target="_blank" rel="noopener">May</a> of this year at for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.</p>
<p>STR's stake in ARA, based on its recent stake increase, is worth around the same as its current market cap - indicating the market is assigning almost zero value for the remaining real estate, hospitality segment, and the 54.8% stake in <a href="https://www.smartkarma.com/entities/malaysia-smelting-corp-bhd" target="_blank" data-smartkarma-citation="entities:14425:1" rel="noopener">Malaysia Smelting Corp (SMELT MK)</a>, and stake in <a href="https://www.smartkarma.com/entities/suntec-reit" target="_blank" data-smartkarma-citation="entities:151:1" rel="noopener">Suntec REIT (SUN SP)</a>.</p>
<p>Illiquid, depressed pricing, with a potential major catalyst in the pipeline, this appears ripe for Tecity to take the company private.</p>
<p>As always, more below the fold.</p>

Back on the 14 August 2020, Straits Trading (STRTR SP) announced its 1H20 results, which showed a 62.9/87.5% decline yoy in EBITDA and EPS, due in part to lower average tin prices and lower sales quantity of refined tin; and the knock on-effects from COVID-19 to its hospitality operations.
Tin prices are up 38% since the March low and 10% since  30 June. There are signs of life in the hospitality front, with talk of bubble travel between countries, which may indicate operational losses have troughed.
But of more interest is STR's 22.06% stake in ARA Asset Management. STR added 1.1% in May of this year at for S$30.2mn. There is talk of IPO'ing ARA, some four years after it was taken private.
STR's stake in ARA, based on its recent stake increase, is worth around the same as its current market cap - indicating the market is assigning almost zero value for the remaining real estate, hospitality segment, and the 54.8% stake in Malaysia Smelting Corp (SMELT MK), and stake in Suntec REIT (SUN SP).
Illiquid, depressed pricing, with a potential major catalyst in the pipeline, this appears ripe for Tecity to take the company private.
As always, more below the fold.

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
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<h2>Far East Orchard Limited</h2>
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<h3>Company Update for 1H2020 Results</h3>
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<p><strong>COMPANY DESCRIPTION<br></strong>Far East Orchard Limited (FEO or the company) is a property developer, hospitality owner and operator with a diversified property investment portfolio comprising purpose-built student accommodation and medical suites.</p>
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<p><strong>SUMMARY</strong><br>Owing to the impact of COVID-19, the Group (comprising FEO and its subsidiaries) reported lower revenue of S$64.9 million in 1H2020, compared with S$75.3 million in 1H2019. This was largely due to weaker performance by the Group’s hospitality business, which had been adversely impacted by the COVID-19 pandemic. Gross profit decreased by 19.0% year-on-year (y-o-y) to S$26.2 million, mainly due to lower contribution by the Group’s hospitality business. At the same time, lower total expenses of S$27.5 million were reported for 1H2020 compared to S$29.0 million a year ago, primarily due to lower distribution &amp; marketing expenses. After accounting for S$27.5 million in total expenses, along with S$5.6 million in other income, other losses of S$3.2 million, S$7.0 million in losses from joint ventures, S$1.0 million in share of profit from associated companies, and S$1.1 million in income tax expense, the Group reported an after-tax loss of S$6.0 million for 1H2020. This comprised a S$0.9 million loss attributable to equity holders and a S$5.1 million loss in relation to non-controlling interest. Given a S$0.9 million loss attributable to equity holders, the Group reported a loss per share of 0.19 cents. While no half-yearly dividends were reported, a final dividend of 6.0 cents per share in respect to financial year 2019 was recently paid on 4 September 2020.</p>
<p><strong>RECOMMENDATION<br></strong>Since our initiation report issued on 4 March 2020, FEO’s share price has declined sharply and reached a low closing price of S$0.945 on 6 April 2020, reflecting concerns over the impact of COVID-19. Nonetheless, we recently note that the share price has recovered to a range of S$0.980 to S$0.985. Meanwhile, in terms of valuation, we adopt a relative valuation approach to estimate a target price of S$1.485 if FEO’s P/B were to adjust to the peer average of 0.54x. Our current target price of S$1.485 implies a 51.5% upside to the current share price of S$0.980. While zero dividends is expected for 2020, we anticipate dividends of 3.0 cents per share to be issued for 2021. Meanwhile, we note that the hospitality sectors in Singapore and Australia are gradually recovering and we are positive on the outlook for these markets. Further, resilient demand for higher education in the UK is expected to support the demand in the PBSA market as the COVID-19 health concerns gradually subside. We are of the view that these developments would help to underpin the Group’s financial performance going forward. Given the above consideration, we have upgraded our recommendation from “neutral” to “buy”. Our current recommendation reflects our view on the potential upside for FEO’s share price in the medium term.</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.





Far East Orchard Limited




Company Update for 1H2020 Results


COMPANY DESCRIPTION Far East Orchard Limited (FEO or the company) is a property developer, hospitality owner and operator with a diversified property investment portfolio comprising purpose-built student accommodation and medical suites.





SUMMARY Owing to the impact of COVID-19, the Group (comprising FEO and its subsidiaries) reported lower revenue of S$64.9 million in 1H2020, compared with S$75.3 million in 1H2019. This was largely due to weaker performance by the Group’s hospitality business, which had been adversely impacted by the COVID-19 pandemic. Gross profit decreased by 19.0% year-on-year (y-o-y) to S$26.2 million, mainly due to lower contribution by the Group’s hospitality business. At the same time, lower total expenses of S$27.5 million were reported for 1H2020 compared to S$29.0 million a year ago, primarily due to lower distribution &amp; marketing expenses. After accounting for S$27.5 million in total expenses, along with S$5.6 million in other income, other losses of S$3.2 million, S$7.0 million in losses from joint ventures, S$1.0 million in share of profit from associated companies, and S$1.1 million in income tax expense, the Group reported an after-tax loss of S$6.0 million for 1H2020. This comprised a S$0.9 million loss attributable to equity holders and a S$5.1 million loss in relation to non-controlling interest. Given a S$0.9 million loss attributable to equity holders, the Group reported a loss per share of 0.19 cents. While no half-yearly dividends were reported, a final dividend of 6.0 cents per share in respect to financial year 2019 was recently paid on 4 September 2020.
RECOMMENDATION Since our initiation report issued on 4 March 2020, FEO’s share price has declined sharply and reached a low closing price of S$0.945 on 6 April 2020, reflecting concerns over the impact of COVID-19. Nonetheless, we recently note that the share price has recovered to a range of S$0.980 to S$0.985. Meanwhile, in terms of valuation, we adopt a relative valuation approach to estimate a target price of S$1.485 if FEO’s P/B were to adjust to the peer average of 0.54x. Our current target price of S$1.485 implies a 51.5% upside to the current share price of S$0.980. While zero dividends is expected for 2020, we anticipate dividends of 3.0 cents per share to be issued for 2021. Meanwhile, we note that the hospitality sectors in Singapore and Australia are gradually recovering and we are positive on the outlook for these markets. Further, resilient demand for higher education in the UK is expected to support the demand in the PBSA market as the COVID-19 health concerns gradually subside. We are of the view that these developments would help to underpin the Group’s financial performance going forward. Given the above consideration, we have upgraded our recommendation from “neutral” to “buy”. Our current recommendation reflects our view on the potential upside for FEO’s share price in the medium term.








Non-SGX Report: Far East Orchard Limited: Company Update for 1H2020 Results

<p><i><b>These equity research reports are not written by the SGX.</b> SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</i></p><p>Initiating Coverage</p>
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<p><strong>Company description</strong><br>Far East Orchard Limited (FEO) is a property developer, hospitality owner and operator with a diversified property investment portfolio comprising purpose-built student accommodation and medical suites. As of 31 December 2018, FEO’s portfolio comprised hospitality properties in countries like Australia, Denmark, Germany, Malaysia and Singapore, as well as development and investment properties in the United Kingdom and Singapore.</p>
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<p><strong>Summary</strong><br>FEO’s share price has declined over the past few years amid signs of weakness in its fundamentals. Profitability has appeared to be lower and financial leveraging has increased. Nonetheless, there are growth conditions in Australia and Singapore’s hospitality sectors and UK’s student accommodation market, which respectively have the potential to improve FEO’s hospitality and property business. Additionally, there are upcoming catalysts in the hospitality business like the expected completion of Far East Village Hotel Ariake Tokyo and the Clan Hotel in 2020. Development projects such as Woods Square in Singapore and Westminster Fire Station in the UK are potential catalysts for the property business as well. Thus looking ahead, there are growth opportunities that can spark a recovery in FEO’s fundamentals. However, the recent coronavirus outbreak is likely to undermine significant improvements in the near term.</p>
<p><strong>Recommendation</strong><br>We adopt a conservative approach to value FEO at S$1.79 per share, representing a potential upside of 57.0% from the current share price of S$1.14. FEO’s low P/B ratio indicates that the company could potentially be undervalued and we think that it has the potential to trade higher. While we have determined the adjusted book value of FEO’s share to be S$2.56, we have assigned a 30% discount to arrive at our target price. This is to account for the uncertainties in realising the properties’ value. Additionally, FEO has a dividend yield above the peer average which makes it relatively attractive, and we think its relatively high P/E is justified by a higher expectation on earnings. Nonetheless, given the COVID-19 situation, we believe that it would be most appropriate to adopt a conservative stance and provide a neutral recommendation on FEO at a target price of S$1.79 per share.</p>
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These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.Initiating Coverage







Company description Far East Orchard Limited (FEO) is a property developer, hospitality owner and operator with a diversified property investment portfolio comprising purpose-built student accommodation and medical suites. As of 31 December 2018, FEO’s portfolio comprised hospitality properties in countries like Australia, Denmark, Germany, Malaysia and Singapore, as well as development and investment properties in the United Kingdom and Singapore.








Summary FEO’s share price has declined over the past few years amid signs of weakness in its fundamentals. Profitability has appeared to be lower and financial leveraging has increased. Nonetheless, there are growth conditions in Australia and Singapore’s hospitality sectors and UK’s student accommodation market, which respectively have the potential to improve FEO’s hospitality and property business. Additionally, there are upcoming catalysts in the hospitality business like the expected completion of Far East Village Hotel Ariake Tokyo and the Clan Hotel in 2020. Development projects such as Woods Square in Singapore and Westminster Fire Station in the UK are potential catalysts for the property business as well. Thus looking ahead, there are growth opportunities that can spark a recovery in FEO’s fundamentals. However, the recent coronavirus outbreak is likely to undermine significant improvements in the near term.
Recommendation We adopt a conservative approach to value FEO at S$1.79 per share, representing a potential upside of 57.0% from the current share price of S$1.14. FEO’s low P/B ratio indicates that the company could potentially be undervalued and we think that it has the potential to trade higher. While we have determined the adjusted book value of FEO’s share to be S$2.56, we have assigned a 30% discount to arrive at our target price. This is to account for the uncertainties in realising the properties’ value. Additionally, FEO has a dividend yield above the peer average which makes it relatively attractive, and we think its relatively high P/E is justified by a higher expectation on earnings. Nonetheless, given the COVID-19 situation, we believe that it would be most appropriate to adopt a conservative stance and provide a neutral recommendation on FEO at a target price of S$1.79 per share.






Non-SGX Report: Initiating Coverage: Far East Orchard Limited

Singapore

Far East Orchard Limited operates a diversified portfolio focusing on property development, hospitality real estate development and management and healthcare real estate. The Company operates a hospitality portfolio spanning Australia, China, Denmark, Germany, Hungary, Malaysia, New Zealand, and Singapore and owns purpose-built medical suites in Singapore.

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