Author Topic: 0703.HK - Future Bright Holdings  (Read 58073 times)

Golden Geezer

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Re: 0703.HK - Future Bright Holdings
« Reply #130 on: May 21, 2018, 01:16:35 AM »
This stock seems to be finally rerating. Some catalysts:

1. (Potential) Sale of part or all of Hengqin as per the recent trading update.
2. A potential new tenant for Yellow House, which they are finally “actively searching” per the last two updates to the market (see my previous rant above).
3. The new logistics centre coming on in June. This may help control food preparation costs and also bids for canteen contracts (eg for casino workers, though I am not sure how likely this is).
4. Food Souvenir division finally nearing breakeven.
5. Completion of Macau-HK bridge and continuing good numbers for Macau GGR, which is reflected in the valuation of larger groups with Macau exposure but not reflected in FB’s valuation.

On the negative, the company seems to really struggle controlling costs, but good that numbers are improving.


LightWhale

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Re: 0703.HK - Future Bright Holdings
« Reply #131 on: August 26, 2018, 09:16:51 AM »
H1 2018 report is out.
On the operational side, Sales and EBITDA are up (22% and 31%) but with no operating leverage the bottom line remains Net Loss.

On the property development side, management is finally showing some transparency.  Rather than looking for partners, they plan to sell 100% of Hengqin Land Project, within 12 months, and with net proceed exceeding book value. They even indicate the range, around 60% above book value, which results in about 672m. With that in cash, and the rest of the company trading at x0.5 BV (=250m), we should see 1.33 per share, which is indeed where the stock traded a few weeks back when a finalised sale was rumoured.

Of course, the negotiations could fail, but at some point they should find a buyer, so it seems to be more about IRR than ROI.


serendibz

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Re: 0703.HK - Future Bright Holdings
« Reply #132 on: August 26, 2018, 11:01:37 PM »
H1 2018 report is out.
On the operational side, Sales and EBITDA are up (22% and 31%) but with no operating leverage the bottom line remains Net Loss.

On the property development side, management is finally showing some transparency.  Rather than looking for partners, they plan to sell 100% of Hengqin Land Project, within 12 months, and with net proceed exceeding book value. They even indicate the range, around 60% above book value, which results in about 672m. With that in cash, and the rest of the company trading at x0.5 BV (=250m), we should see 1.33 per share, which is indeed where the stock traded a few weeks back when a finalised sale was rumoured.

Of course, the negotiations could fail, but at some point they should find a buyer, so it seems to be more about IRR than ROI.

I can't seem to find in the interim results where it is mentioned the range of value they expect to get from the land sale. Can you kindly point out?

LightWhale

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Re: 0703.HK - Future Bright Holdings
« Reply #133 on: August 27, 2018, 02:13:09 AM »
Comment 17. p.21 (copied below) - See the language they use below to draw a very clear parallel and with specifically invoked figures:


"The assets and liabilities attributable to the subsidiary, which is expected to be sold within twelve months, have been reclassified as assets/liabilities held for sale...net proceeds of disposal are expected to exceed the net carrying amount of the relevant assets and liabilities and accordingly, no impairment loss has been recognised...On 1 December 2017, the Group entered into a preliminary sale and purchase agreement to dispose of the leasehold land and building amounted to HK$32,429,000 which was classified as property, plant and equipment before the agreement was entered into. Such property was classified as held for sale as at 31 December 2017 and no impairment was made as the directors of the Company expected that the fair value (estimated based on the agreed price in the agreement) less costs to sell would be higher than the carrying amount. During the Period, the Group disposed of such property at a consideration of HK$52,000,000"



serendibz

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Re: 0703.HK - Future Bright Holdings
« Reply #134 on: August 27, 2018, 05:39:03 PM »
Comment 17. p.21 (copied below) - See the language they use below to draw a very clear parallel and with specifically invoked figures:


"The assets and liabilities attributable to the subsidiary, which is expected to be sold within twelve months, have been reclassified as assets/liabilities held for sale...net proceeds of disposal are expected to exceed the net carrying amount of the relevant assets and liabilities and accordingly, no impairment loss has been recognised...On 1 December 2017, the Group entered into a preliminary sale and purchase agreement to dispose of the leasehold land and building amounted to HK$32,429,000 which was classified as property, plant and equipment before the agreement was entered into. Such property was classified as held for sale as at 31 December 2017 and no impairment was made as the directors of the Company expected that the fair value (estimated based on the agreed price in the agreement) less costs to sell would be higher than the carrying amount. During the Period, the Group disposed of such property at a consideration of HK$52,000,000"

The leasehold land was classified at cost less depreciation, hence there may be some gap between its book and market value. The Hengqin land was carried as investment property (market value) before being reclassified as assets for sale. I would not expect its sale value to be as high as 60% above carrying value.

LightWhale

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Re: 0703.HK - Future Bright Holdings
« Reply #135 on: August 28, 2018, 02:13:02 AM »

The leasehold land was classified at cost less depreciation, hence there may be some gap between its book and market value. The Hengqin land was carried as investment property (market value) before being reclassified as assets for sale. I would not expect its sale value to be as high as 60% above carrying value.

Yes, cost - depreciation + leasehold improvements, that's a good point. Yet Hengqin value is discounted at ~12% on average (7%-16%), x3 the discount rate for the Yellow House. As the construction progresses, FB reduces those initial risks, thus increasing value merely through compliance with the initial estimates.
Which price do you expect?
« Last Edit: August 28, 2018, 03:14:36 AM by LightWhale »

mrbrown82

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Re: 0703.HK - Future Bright Holdings
« Reply #136 on: September 29, 2018, 01:21:54 AM »
I don't think the footnote meant discount RATE of 7% -16% but a discount of 7-16% to comparables transaction. It is not to be confused at the 4% "reversionary yield" (discount rate) for the Yellow house.  I think at best we can see a final price of 20% higher than the latest net carrying value (which itself is subject to periodic remeasurement).

LightWhale

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Re: 0703.HK - Future Bright Holdings
« Reply #137 on: September 29, 2018, 03:11:53 AM »
I don't think the footnote meant discount RATE of 7% -16% but a discount of 7-16% to comparables transaction

Thanks, a good correction.
Since fair value estimate is 3rd level (no proper comparable transactions exist), what do you base the ~20% premium on?