Popular Holdings seals en-bloc deal to buy Permai Court

Popular Holdings announced that it has stuck an en-bloc deal to buy Permai Court, a freehold site at Kampong Bahru for $20.25m. Permai Court is bounded by Keppel Road and Kampong Bahru Road and is in close proximity to the Sentosa Integrated Resort & the CBD area. The site sits on a land area of 10,000 sqft including an adjoining state land, and can be built up to a GFA of 23,176 sqft. Land cost works out to $982 psf ppr.

The acquisition is the fourth site that Popular has acquired since it made its maiden foray into the property business and is in line with its goal to grow its property arm. The track record so far has been credible, with the first two projects, One Robin and 18 Shelford, completed and selling well. The group’s third project, 8 Raja, in the Balestier enclave, is under construction currently. As of 1QFY12, the group is sitting on a cash pile of $120m which is likely to grow with steady cash generation from its book retailing/publishing business and progressive sales from its development projects.

In an era where digitalisation and the internet is causing the demise of brick and mortar bookstore chains, Popular is a standout success in the book retailing business. Our sum-of-parts valuation suggest the stock is worth S$0.40/share, comprising: 1) Net cash of $105m, 2) Properties with book value of $62m, 3) Book retailing and publishing valued at 7x P/E which yields a value of $168m, implying the stock is priced at under 0.4 P/Value. Moreover, the stock offers a yield in excess of 6%, assuming it maintains its payout of S$0.01/share. A safe stock for the patient investor.