Hello,
Welcome to another Mikro Kap research report. This year we’ve covered a lot of ground—different geographies, different industries—with the same goal: surface under-covered setups with the most asymmetric risk-reward.
That doesn’t change with this 10th deep dive. The situation is just as unique, and you won’t see it on any other Substacks. I was lucky to stumble on it early—already at letter B of another A–Z walk through the Singapore exchange.
This might be my longest report yet, but the thesis is simple: this company is redeveloping a specialized property that I estimate will sell for 84–145% of today’s market cap, with management intending to return the net proceeds as a dividend. Together with the existing cash pile (mostly tied up in the project) and you’re looking at 1.5× to 2.1× the market cap in net cash and property proceeds alone. If my valuation work isn’t wildly off, it’s hard to see how one loses money buying into this.
And you’re not just buying cash and a check, the thesis doesn’t stop there. You also get the core business—which isn’t some kind of melting ice cube. It’s grown revenue and profits in 8 of the last 10 years, and even in the middle of its toughest downturn to date it’s holding up surprisingly well, posting 24% EBIT margins.
So if my redevelopment math is even remotely close, the company’s EV will flip negative within 1.5–3 years—meaning you’re effectively being paid to own the core business. That looks like a clear mispricing, one that I think market will correct once the property is sold, the dividend is paid, and/or the cycle turns for the core business.
Without further rambling, let’s dive in. I’ll cover the redevelopment property—why it’s scarce, how I valued it, and the expected timeline—then move on to management’s capital allocation, the core business, and what it all means for the risk-reward.
In short, the setup was compelling enough that I sold two smaller holdings to initiate a 10.5% position.