Author Topic: 0281.HK - Rivera Holdings  (Read 1192 times)

RVP

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0281.HK - Rivera Holdings
« on: February 19, 2020, 01:55:12 PM »
Rivera is a simple HK-based investment holding company that's currently trading at the value of its cash and investments. You get a 37% owned associate and a 12.5% listed equity stake for free, both of which own and develop real estate in Shanghai. Rivera itself does no development (at least for the past decade), and is merely a conduit through which to receive dividends from their associate and equity stake. Most of these dividends flow back to minority shareholders via their own dividends.

The main parts (in HKD):
1. Cash and investments - $1.25B ($1.05B cash, $200M securities), cash is majority denominated in HKD.
2. 12.5% stake in listed equity Tomson Group - $567M
3. 37% stake in associate - $782M
4. Investment property (Macau land, hidden optionality) - $28.5M ($675M fair value if granted rights to develop on)
5. Virtually no liabilities

Total: ~$2.6B - $3.3B+
Current market cap: $1.3B

It is hard to pin down the exact earnings power of their associate and listed equity, but my estimates run around $100M/ year recurring income (just rental, before property sales).

Tomson Group (the 12.5% listed equity stake, 0258.HK) owns some very prime real estate in Shanghai (residential, office) that spans roughly 5M square feet (595k sq ft at Rivera's share). They have a net cash balance sheet, but historically issues shares to pay dividends/ develop properties.

The associate (private, 37% stake) owns retail and office properties in Zhangjiang Hi-Tech Park, which is located in the outskirts of Shanghai, and somewhat fashioned to be the city's version of Silicon Valley. Developed property portfolio is roughly 2.2M sq ft (820k sq ft at Rivera's share), with another 1M or so for sale (mainly car parks). Has substantial net cash balance sheet.     

Management / family is a reputable small developer in Shanghai, and has run their business rather conservatively (which can't be said about many other property developers in China). In the past, they've shown good patience and have invested well opportunistically. With all the pressure that is happening in China right now, their dry powder (across all vehicles) should bode well.     


Foreign Tuffett

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Re: 0281.HK - Rivera Holdings
« Reply #1 on: February 19, 2020, 04:22:48 PM »
Annual overhead at holding company level?


Former Teldar Paper Vice President

RVP

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Re: 0281.HK - Rivera Holdings
« Reply #2 on: February 19, 2020, 08:36:58 PM »
Annual overhead at holding company level?

They run a spartan operation with 5 employees. Annual overhead is ~$14M (shares rent with family-controlled Tomson Group), which is more than covered by annual interest income.   

Stuart D

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Re: 0281.HK - Rivera Holdings
« Reply #3 on: February 19, 2020, 11:56:34 PM »
Thanks for posting, interesting idea.

Are the Tomson Group's (0258.HK) financials too good to be true?

When I think property development, I think leverage. Yet 0258.HK has total borrowings of only $1.3b and a monster cash pile of $5b.

RVP

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Re: 0281.HK - Rivera Holdings
« Reply #4 on: February 20, 2020, 04:12:40 PM »
Thanks for posting, interesting idea.

Are the Tomson Group's (0258.HK) financials too good to be true?

When I think property development, I think leverage. Yet 0258.HK has total borrowings of only $1.3b and a monster cash pile of $5b.

They have $4.6B current taxes payable, so the net cash pile is actually neutral. Of course if you consider their investment properties and properties held for sale/ development, then yes, they do have additional liquidity. A case can be probably made that it's cheap as well.

But I'm not as comfortable with Tomson, partly because they continually issue shares before dividend date, regardless of share price. I think overall it's been value neutral, and you can see that reflected by the rather anemic growth in book value over the decade. Whereas Rivera's BV has grown at a nice clip over time simply as a result of cash build up, courtesy of dividends from Tomson and their associate.