A Look into KOP Limited

Company Website: 
 
http://www.koplimited.com/index.php

http://www.kopproperties.com/

Corporate Profile:
Source: AR2016 pg 2

KOP Limited (“KOPL” or the “Group”) is a Singapore-based real estate development and entertainment company with a diversified and robust portfolio of developments and investments in Singapore as well as the region.

With origins leading back to KOP Properties Pte. Ltd., the Group has quickly built a reputation as a developer of niche, iconic and award-winning projects such as The Ritz-Carlton Residences and Montigo Resorts, Nongsa and Seminyak in Indonesia. KOPL’s property business covers areas of real estate development, investment and management services and is built on an integrated business model. Through a broad range of distinctive and award-winning real estate and hospitality projects crafted with quality design and workmanship, KOPL provides unique living and leisure experiences to its clients.

The Group’s entertainment arm will endeavor to drive investments and partnerships with specialist companies that focus on providing venues as well as educational entertainment content including concerts, musicals, exhibitions and events.

Corporate and Business Structure:

Source: http://www.koplimited.com/corporate-structure.php, AR2016 pg 29

KOPL has 2 business arms: One is the Property business and the other is the Entertainment business.

The property business is Singapore-based and is in the area of real estate development, investment and management services. We are built on an integrated business model with capabilities ranging from investment structuring, project conceptualisation, in-house management, sales and marketing of completed units and the provision of real estate management services.

The entertainment business is involved in the development and investment of destination based entertainment and the arts. Having been involved in theatrical distribution, concert promotions and experiential shows, they focus on world class performances to Singapore and the international markets.

Recent Corporate Highlights:

On 28 Jul 2017, they announce the incorporation of a JV company (link) that is called Snow Star Properties Co. Ltd that will be a 30% held subsidiary of KOP Northern Lights Pte Ltd for Project Wintastar (which is the Ski Resort Project in Shanghai).

On 12 Jul 2017, they had the approval to extend for a period of one month to hold their AGM for FY2017 due to the fact that their annual report of the company would bot be ready. (link)

On 13 Jun 2017, they were unable to proceed with the proposed disposal of 8 Strata units in Prudential Tower (link). This was following an announcement that they were in negotiations to dispose of the 8-strata-titled office units on 6 Apr 2017 (link). The company that was in discussions with the buyer was Epic Land (which was 25% owned by KOP and was linked to Lian Beng Group and KSH Holdings via Mr Ko Chuan Aun who is the president of KOPL and was the ex-CEO of the previous RTO company). This asset was acquired back in 2014 when it was annouced on 15 May 2014 of a consortium consiting of Lian Beng, KSH, KOPL and Centurion acquiring a 92.8% interest in Prudential Tower for SGD 512mio (link). Epic Land is the JV vehicle in which they acquired the building and the breakdown shareholding of Epic Land is 32% (Lian Beng), 28% (KSH), 25% (KOPL) and 15% (Centurion).

Major Shareholders:
Source: Bloomberg, AR2016 pg 170–171

As of 13 June 2016
Source: AR2016 pg 170–171

Financials:

Source: Q42017 report, AR2016

P/L Statement

2017 vs 2016

B/S statement

2017
2016

Cashflow statement

Debt Profile:
Source: AR2016

Note 20 of AR2016 pg 144
The Group has pledged its freehold land and leasehold land and buildings with a total carrying amount of $50,797,000 (2015: $36,386,000) to secure the bank overdrafts, borrowings and banking facilities as disclosed in Note 24 to the financial statements.

Note 24 of AR2016 pg150–151
They have the following debts on their books:

1) Bank overdraft (SGD-denominated) at an effective interest rate of 5.75% per annum repayable in 12months. The overdrafts are FRNs that are secured against their properties.

2) Revolving credit facility of SGD 4mio at 4.45% that matures at 1 Apr 2016. They are secured against their properties.

3) 5Y term loan of SGD 1.082mio at 6% (amount was SGD 3.611mio in FY2015). The loan is repaid over 60monthly amortising instalments and is secured.

4) 5Y term loan of USD 2.8mio at 7% (amount was USD 5.479mio in FY2015). The loan is repaid over 60monthly amortising instalments and is secured.

5) 7Y term loan of USD 12.974mio at 7% (amount was USD 14.857mio in FY2015). The loan is repaid over 84monthly amortising instalments and is secured.

6) 5Y term loan of SGD 16.26mio at 1.75% + COF.

7) SGD 10.083mio loan (SG building and land) at 3.20%. Loan is amortized over 180 and 60 monthly payments in 3 tranches.

Share Price Performance:
Source: Bloomberg

Personal Comments:

Their top line has fallen in FY 2017 though there was a substantial increase (182%) in ‘other operating income’ of which I do believe is based on interest/investment income and commissions received of which the annual report does not clarify clearly. The biggest increase in other operating income happened in Q1 2017 where there was a SGD 9.9mio received. Whether the same can be repeated in the upcoming year remains to be seen.

With regards to their balance sheet, they have almost no more cash on balance at only about SGD 800K, with current liabilities amounting to SGD 41mio, they are in my opinion cash strapped. Given that most of their loans are in a monthly amortizing strucutre, they are at very most in my opinion above water for perhaps 9months assuming that their finance costs runs at SGD250K every 3 months (for Q42017, their finance cost is SGD261K based on their cash flow statements).

They did manage to divest/dispose of an asset that gave them a SGD 34.9mio cash proceed in the bank which was used to pay of some debts. But they are still ultimately in negative cashflow.

Also that they do have projects that require financing (especially the Shanghai Winterland project (link)) , which explains the need of financing that I have heard from my sources. Therefore they have on their balance sheet a field that holds ‘Non-Current Assets Held for Sale’ seen in the AR2016 where they have about SGD24.9mio of assets there that was perhaps sold for a supposed Net Procced of SGD 9.09mio (does this link to the Q1 2017 other operating income?). I am waiting for their final AR2017 to come out to have confirmation but they have filed with SGX for an extension period.

More study is required, though I do believe that the KOP Group (the ultimate parent and privately held) has some pretty deep pockets as according to the Forbes article (link) that the group has SGD 3.1B in assets and SGD 100mio in revenues. Further more the article sort of suggested the fact that there was middle eastern money involved. Of course I cannot state for certain that all this is true and it is just conjecture on my part but this is an interesting company to keep an eye out for.

Further Reading:

http://thepeakmagazine.com.sg/interviews/ong-chih-ching-expands-kop-group/

https://www.forbes.com/sites/forbesasia/2015/02/25/disney-on-downhill-skis/#4c91e61342af

http://www.propertyguru.com.sg/property-management-news/2015/8/104663/kop-to-jointly-develop-shanghai-winter-resort — 2015

http://www.koplimited.com/download/publications/2016/AnnualReport2016.pdf

http://www.koplimited.com/download/publications/2016/1stQtr2017.pdf

http://www.koplimited.com/download/publications/2016/KOP%20-%20Half%20Year%20Results%202Q%202017.pdf

http://www.koplimited.com/download/publications/2017/KOP%20-%20Results%20Announcement%203Q%20FY2017.pdf

http://www.koplimited.com/download/publications/2017/4Q%20Results.pdf

I have to include this basic disclaimer as frankly this is just an opinion post and everyone have to take responsibility for their financial well being.
Disclaimer:
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