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The Assembly Place IPO — How One Company Is Quietly Redefining Urban Living · Investor Exchange

• 0:02
  At Investor Exchange, it's time for another podcast with your hosts, David and Brenda.
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  Welcome to the debate. Today, we're putting the assembly place,
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  or TAP as they're known, under the microscope.
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  This is Singapore's largest co-living operator. We're talking a 34% market share,
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  and it's just hit the catalyst board at 23 cents per share.
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  I'll be arguing the bull case. I see TAP as a scalable asset light technology
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  play that's really cracked the code on property management.
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  And I'm taking the bear position.
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  Because while the, you know, the headline growth looks impressive,
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  I see a classic rental arbitrage model that's just been dressed up with a tech valuation.
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  Fundamentally, its structure relies way too heavily on lease renewals and,
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  frankly, landlord goodwill, creating a fragility that the asset light label conveniently masks.
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  Okay, let's start with the financials because the turnaround story here is,
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  well, it's undeniable. TAP has gone from a net loss in FY23 to a net profit
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  of over $6.2 million in FY24.
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  Revenue has just exploded from roughly $6.9 million to nearly $19 million in just two years.
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  I mean, that's a 66% compound annual growth rate.
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  This isn't luck. It's the result of a high-margin model that generates cash
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  without that heavy capital drag of buying buildings.
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  Sure, but we have to look at how that model works.
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  You call it asset light, I'd call it liability heavy. They don't own the buildings,
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  that's true, but they're on the hook for the master leases.
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  And if you look at the balance sheet, they've got a negative working capital
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  position of $8.31 million.
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  In plain English, that just means their short-term debts are bigger than their short-term assets.
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  They're funding operations by, what, delaying payments or just banking on future
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  cash flow. That's a huge liquidity risk.
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  Okay, but negative working capital is pretty common in high-turnover businesses.
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  Think Amazon or supermarkets, where you collect cash from your customers long
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  before you pay your suppliers.
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  TAPS operations generated $12.68 million in operating cash flow in FY24. And why?
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  It's because of their tech stack. Their proprietary management system lets a
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  single employee manage 81 rooms. That's a ratio of 1 to 81.
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  That efficiency is their moat. They're printing cash faster than their liabilities come due.
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  Efficiency helps, I'll grant you that. But it doesn't cure the structural flaw of being a middleman.
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  I mean, TAP is just squeezed between the landlord and the tenant.
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  Their own prospectus admits that 93 keys expire in 2026 and another 134 in 2027.
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  So, if the property market stays hot, what do you think landlords are going to do?
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  They'll hike the rent on those master leases or just sell the building and cut tap out entirely?
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  You can't just tech enable your way out of the fact that you don't control the underlying asset.
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  I disagree on the lack of control part. Their control comes from occupancy.
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  They average 90.6% occupancy in FY24.
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  Landlords want yield security, and TAP provides that better than anyone.
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  Plus, they're diversifying so quickly. They aren't just doing residential co-living
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  anymore. They've moved into student housing, healthcare accommodation, and even hotels.
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  That diversity buffers them against a downturn in any one of those sectors.
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  But high occupancy is a double-edged sword here. In a master lease model,
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  you need that 90% occupancy just to cover your fixed payments.
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  If Singapore tightens foreign employment passes, which is a very real policy
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  risk, and suddenly occupancy drops to, say, 75%,
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  Their margins just evaporate instantly. And let's talk about the quality of their earnings.
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  A big chunk of their financial movement comes from fair value adjustments on
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  investment properties, which swung to a $5.6 million loss recently.
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  The bottom line is just far more volatile than the cash flow might suggest.
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  Volatility is inherent in any aggressive expansion. I mean, the goal is 10,000
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  keys by 2030, nearly tripling their current count. And they're evolving beyond being just an operator.
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  They're taking minority stakes in properties, like the disposal gain they realized
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  from that Gaylong Road property.
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  They're becoming a strategic investor, capturing asset appreciation right alongside
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  the rental yield. That's the next phase of the business.
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  And scaling to 10,000 keys doesn't just triple your revenue,
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  it triples your complexity.
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  They're expanding into Malaysia with the Bangsar project.
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  Now you've got currency risk and a totally different regulatory environment.
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  Plus, let's be honest, the barriers to entry here are low.
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  Competitors like Cove and Habit are very aggressive. If a price war breaks out
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  or if they start bidding up the cost of master leases, TAP's asset-light margins
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  will be the first casualty.
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  So to summarize my position, TAP is a market leader with a proven cash-generating
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  engine and a very clear path to regional scale.
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  They've turned co-living into a science.
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  And I maintain that TAP is a fragile ecosystem. It's totally dependent on perfect
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  execution and a very cooperative property market.
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  It's a high wire act with almost no safety net.
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  I think we can agree the growth is real, but the debate really comes down to
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  the stability of that foundation.
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  That's all for today. This content is intended to serve strictly and only as an informational,
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  independent, objective summary of recent events and should in no way be interpreted,
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  construed, or relied upon by any party as inside information or financial advice.