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  • smkros smkros Jan 28, 2013 4:17 PM Flag

    Shenzhen Land Sale Comparable supports NTE land valuation of $489m

    I found the below land comp with a quick google search. This is not a perfect comp, but provides at least a ballpark idea of what land in Shenzhen is worth. Typically residential land is more expensive than commercial land, but can vary dramatically by location.

    The GFA of 182,100 square meters is 1.96 million SF. CNY 2 billion is $320 million. The purchase price is $163 per buildable square foot.

    Applying the same $163/SF to NTE's 3 million SF of GFA would imply the land is worth around $489m.

    Excuse the sensational headline, but the point is the land is worth a big number. Keep in mind NTE will have to build a new factory as well.
    China Overseas Land Buys Land in Shenzhen for CNY 2 Bn
    Nov 29, 2012 10:55 AM GMT+0800 | Prepared by ChinaScope Financial | Source: Netease
    •On November 28, the Shenzhen branch of China Overseas Land and Investment (0688: HKG) purchased a land parcel in Shenzhen for a total of CNY 2 billion, or CNY 10,900 per square meter of gross floor area (GFA), representing the highest land transaction price in Shenzhen this year.
    •The land plot is designated for residential purposes and covers a site area of 151,787 square meters or GFA of 182,100 square meters.
    •Over the first ten months this year, China Overseas Land spent a total of CNY 15.52 billion on land purchase in many second-tier cities including Foshan, Kunming, Dalian, Yantai, Tianjin, Hangzhou, and Shenyang.

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    • In the previous call Koo estimated that building the buildings on the new land would cost $25M. That's pennies compared to what the old land is worth.

      Sentiment: Strong Buy

    • No way it will go for $162 per square foot. Probably a multiple of that. This is designated to be "The Manhatten of China" "The Zone" Commercial is going to be mostly financial and high end retail. Modeling it after Central Kong Kong. And even at $162, that's is $10 per share. Not to mention the $4+ they have in the bank. At $13 the company is worth less than nothing. The new plant they need to build will be a fraction of these costs.

      People always talk about real estate plays but sometimes the value is not unlocked and it gets discounted. But you know this is going to happen in 2015. Money is already starting to change hands in that area and it's big $$$$$ already. Will only get more expensive over the next 3 years. And Koo already said they will sell it.

      • 2 Replies to wonkko
      • Does anyone know the tax bite on the profit on this property?

      • Since China's State Council announced the approved development and opening-up policies for the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone in mid-2012, the 15-square-kilometer area in the western coast of Shenzhen - in the forefront of China's reform - has come under the world's spotlight ever since.

        As of August 2012, the experimental zone had collected accumulated investment intentions worth 300 billion yuan, right after the official announcement of the zone's approval from the central government. Over 70 companies from the Fortune 500 have showed interest to station in the district so far, according to Tse.

        By the end of 2015, the Qianhai special zone aims to reach a GDP of 50 billion yuan.
        In 2020 - at the end of the third development stage starting in 2016, which also marks the completion of the construction of a world-class modern service cooperation zone, Qianhai is tipped to become a regional production-based service center and the base of world trade for services, with GDP expecting to exceed 150 billion yuan every year.
        Qianhai could become the area which makes the most money on every square meter in China, considering the hundred billion yuan to be generated from the pinhead 15-square-kilometer area, said Tse.

        "Its business model is basically a clone of the Central to the Causeway Bay area in Hong Kong," Tse added.