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Unusual for me to post 3 times in a day – but this one was too good to miss and I don’t want some guy on twitter beating me to it and claiming the credit.

Just been working the numbers on Tejoori and noticed something I thought I would share…

The recent RNS said a recent Arjan plot with a book value of $4.3m sold for $6.5m – a 48% uplift.

The remaining Arjan plots are in the books for $9.5m if one applies a similar uplift you get to $14.14m.

They hold cash of $3.5m and Bekon is listed as for sale at £3.35m.

What is interesting is the next bit – they have a receivable -valued at $3.1m in the Arjan Projects.This is note 7.1 in the accounts here.

“7.1

On 26 October 2008, the Group entered into a contract to sell its interest in Lagoons plot 3, for USD 12.6 million of which USD 3.1 million was receivable from the acquirer at the time.

 

In September 2012, the acquirer of the plot signed an agreement with the Group whereby the acquirer delegated the Group to perform settlement with the main developer of Lagoons plots for replacing the Lagoons plot with an alternative plot of land.
During the year ended 30 June 2013, the Group successfully replaced the Lagoons plots for alternative plots in the Arjan project located in Dubai, UAE. USD 0.6 million of the additional costs incurred on the exchange of plots was payable by the acquirer which has been added to the earlier receivable of USD 3.1 million. However, the acquirer has refused to settle the balance due to the Group. While the negotiations are ongoing to settle the dispute, no impairment has been recognised as the Group has not yet transferred the new plot of land in the Arjan project to the acquirer and holds it as collateral for the receivable.
So the company holds another receivable in the same project (ish) as the one which they have sold for a 49% uplift.
Thats another 3.7m in the same area – if you apply another 49% uplift and total the lot (remembering bekon which is in the books for $3.35m) you get to valuing the plot at $5.49m giving a total NAV of $33m of which $10m is cash, in a company which is currently trading at $8m.
All depends on the exact wording of the contract surrounding the receivable, and the position of the counterparty to the transaction…  Still not too far fetched to say there could be an additional couple of million here…
To me it is optimistic but not ridiculous to value a plot which is near to other plots and apply similar uplifts, given a recent transaction… I have looked at the area on Google earth and one could argue that as it develops nearby plots become even more valuable….
I already hold lots of this, given its size so wont be buying more.  I may sell for portfolio management purposes but I think this one can plausibly go much higher yet…  Its all hypothetical but there is a solid investment logic behind it.
Not one for widows and orphans and is very high risk but the opportunity may still be here….
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