Hi Rusty,
Very hard to assess. As an ex stock holder I have watched the developments fairly closely over the last ten years.
In the past there were considerably more announcements relating to projects, their progress and their promise. Not being a current shareholder, I now rely on public announcements. Unfortuneatley the only info that I have been able to find that is made public is that which is legally required (Annual Reports, AGM notes and major Transfers of Stock Ownership).
On the basis of that information,and assessing the profit predictions from each project, I have felt that there are too many variables to have sufficient confidence to re-invest. However I must qualify this position by indicating that I choose to ignore the tax credits when assessing the future viability of the Company.
The issues for me are:-
1. Even though there has been a very healthy advanced sales record on the accomodation side of the projects,when it comes to settlement, will the banks still assess the apartments at the purchase value, particularly if they believe there is the beginnings of apartment over-supply in Brisbane, Sydney and Melbourne? This is the very problem that eroded the expected profitability of Oceanique and resulted in lengthy legal proceedings to hold purchasers to their committments. Also will the new international investment costs being imposed in NSW further dampen enthusiasm?
2. For me there has been inadequate detail as to understand the economic attractiveness and viability of the commercial sections of the apartment blocks, and potential returns to the company.From what I have been able to understand, it is from these commercial properties that most of the company's profits would be derived. I have not seen details of expected net returns from these businesses when fully leased or sold. Hence I have not been able to assess their true value, yet they lie at the heart of the company's potential profits.
3. The company's property at Point Grey in WA , rather than being an asset, could be considered as becoming a liability . Although it has been zoned for over 3,000 residential lots, with tourist and commercial facilities, marketing the property on its potential residential base has its problems.
The downturn of the mining industry in the West has almost certainly impacted on the number of cashed up young families. Overseas residential investors, particularly Asian, appear magnetised to apartments close to transport links in inner-city areas and not scrambling to purchase remote, suburban properties. Although I may well be wrong, I suspect that if the company decides to unload this property, it will not realise anywhere near previous projected value.
If the property is able to be sold, I cannot envisage a new owner incorporating the Peel Water model. I suspect that asset, which is currently costing the company,may well be a write-off.
Finally is the economic climate one that will support ongoing significant growth in the property market to a level that allows Tian An to compete with other large players?
After Port Bouvard had overstretched itself and got into serious difficulty, I remember Ross Neuman explaing their plight by claiming that no one saw the GFC coming!
Whether that was the case or not, there was hardly a person I knew that had not expressed concern that the real estate frenzy could not possibly continue and prices could not continue to grow at the same rate. Most were predicting a massive downturn. It could not go on!
I suspect now is also a time where great care should be taken and decisions made only on full and understandable information.
Sorry for being a wet-blanket. I would love to see comments that would balance my scepticism.
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