IS WEE HUR Holdings impacted by the anti-speculation measures for the property market announced by the government a few days ago?
Hardly, it would seem, judging by the discussion which about 30 NextInsight readers had with the management of the company on Saturday.
In fact, Wee Hur could well be a beneficiary if residential land prices fall sharply and it buys land parcels then
To start from the start, Wee Hur is largely a construction company which has gingerly stepped into property development only in 2009.
It continues to be a beneficiary of a construction boom in Singapore (more on this later) even as residential property development looks set to slow down.
Wee Hur executive chairman Goh Yeow Lian pointed out:
* Wee Hur has two property development projects currently – residential property Villas@Gilstead has been completely sold while Harvest@Woodlands is 80% sold. Harvest is an industrial project.
(Related good news: Substantial revenue and profit from these two projects will flow into Wee Hur’s financial statements in the coming quarters)
* In scouting for landback in recent times, Wee Hur has turned away from several potential buys because the market prices didn’t made sense to it.
As a result, it has only 1 piece of residential property land in Upper Paya Lebar and a large land parcel for industrial development in Kaki Bukit. The government's anti-speculation measures apply only to residential properties.
There is yet good news for investors of industrial properties. Wee Hur's project, Harvest@Woodlands, offers a gross rental yield of 5-7% a year, according to Mr Goh's estimate.
Touching on Wee Hur's approach to making money in property development, he said: “In this business, it’s about how cheap you buy the land, not how big a landbank you have. It’s a question of timing.”
Similarly for its construction business, Wee Hur tenders sensibly, instead of at 'suicide prices' just to secure work. And it would look for jobs only with clients that are deemed to be credit-worthy.
As for the construction boom, which encompasses infrastructure for institutions, commercial entities and the government, Wee Hur stands to reap big business.
The Building and Construction Authority has raised its projected construction demand this year to S$22-28 billion, up from its forecast of S$21-27 billion made last year.
Wee Hur is a BCA-registered A1 builder which is allowed to tender for public building projects of unlimited value.
Wee Hur's order book as at end-Sept 2010 was S$325.1 million which would be recognized between end-Sept 10 until year 2013.
To give some perspective to this order book, consider that in the first 9 months of 2010, Wee Hur booked S$97.1 million in revenue.
Phillip Securities in a report has projected that Wee Hur's net income would more than double to S$54.3 million this year (2011).
Last Saturday’s visit by NextInsight readers (who were later treated to a good lunch by Wee Hur) is the latest in a series. Those who went ranged from 20-somethings to retirees, and included several shareholders of Wee Hur.
There were, among others, engineers, remisiers, an auditor, an analyst with a keen focus on property sector, and a writer from The Edge magazine.
The invitation to visit was published here: WEE HUR: "Come visit our facility, meet our management, know our business... and have lunch"
Look out for our invite to visit another promising company next month.