Author Topic: 0184.HK - Keck Seng Investments  (Read 31683 times)

yadayada

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0184.HK - Keck Seng Investments
« on: March 01, 2014, 09:03:15 AM »
It looks really cheap at face value. Looking at how much cash it generates, at their property values and their cash stash. Not sure what the catch is here?

They own and develop properties in hong kong thailand singapore and Macau and the US. FCF yield is like ~20%. But they had a drop in revenue in 1st half 2013 so far.
« Last Edit: March 01, 2014, 05:49:53 PM by Parsad »


king888

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Re: Keck seng investments - 0184
« Reply #1 on: March 01, 2014, 09:18:42 AM »
They don't have property in Thailand . They own Sheraton Saigon (Vietnam) which is bith hotel & casino.
The litigation with this casino and player had been a drag to share price for many years. The lawsuit was dismissed last year , not sure if the play can still appeal.
Will Thrower of Global VI board has followed this company for 2-3 years . You can check his long in that board thesis http://investorshub.advfn.com/boards/read_msg.aspx?message_id=95561211

I have a small position since last year . My long case is it's legit with good dividend and was trading at discount to nav and the lawsuit was non-sense ( Player claimed to win jackpot from slot machine's malfuncion)

yadayada

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Re: Keck seng investments - 0184
« Reply #2 on: March 01, 2014, 09:24:12 AM »
yeah got them switched up your right. And it looks like they will pay v large dividends soon, now that they paid off most of their debt?  Is the law suit the only reason it was cheap? Price didn't really jump up after that announcement.

rayfinkle

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Re: 0184.HK - Keck Seng Investments
« Reply #3 on: March 02, 2014, 08:01:58 AM »
Any governance issues to think about?

yadayada

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Re: 0184.HK - Keck Seng Investments
« Reply #4 on: March 22, 2014, 04:26:59 PM »
It seems insiders own a large amount, and what about those minority interests? Half the dividends go their way. I also cant figure out why they have almost their market cap in cash. What will they do with that?

If minority interests get those dividends, does that mean there are like private preferred shares for this company? And what % of the assets do regular equity holders really own then?

Only like 1/6th of the profits went to shareholders through dividends.  They generated roughly 2 billion in cash the last 8 years or so. But most of it is just in bank deposits now still on their balance sheet. You would think they should buy back some of their own shares.

Does anyone have acces to the VIC write up?

They did do some serious investments in real estate in 2009-2011. So i wonder what that is worth now.

Packer16

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Re: 0184.HK - Keck Seng Investments
« Reply #5 on: April 12, 2014, 04:44:20 AM »
To be compliant with IFRS they need to perform annual RE appraisals on their properties so the book value of equity should reflect any increase in value.  I don't understand the VIC posting as it writes up the already IFRS adjusted book value based upon recent transaction (pretty speculative unless you are RE appraiser).  If you use the IFRS numbers you come up with a discount of 43%, pretty typical of HK real estate hold cos.

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yadayada

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Re: 0184.HK - Keck Seng Investments
« Reply #6 on: April 12, 2014, 06:05:43 AM »
yeah i think your right. They didnt make a significant gain on sale when they sold alot of real estate, like the VIC article implies. So the book value of 3.4 billion should be roughly correct. Still not a bad pick to invest in tho, but i guess not nearly as much upside.
« Last Edit: April 12, 2014, 06:24:19 AM by yadayada »

thefatbaboon

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Re: 0184.HK - Keck Seng Investments
« Reply #7 on: April 12, 2014, 06:26:08 AM »
The main uncertainty is regarding the value of the macau assets - which I think do have the potential to be significantly higher than their book/ for example they sold two apartments there during 2012 or 2013 at a good clip over book

As regards the minority interests you mentioned earlier it is predominantly the two Vietnamese hotels where they own 64% of the Sheraton and 25% of the Caravelle

The big sale you mentioned where they only realized a small gain was of two properties in Japan/  They had only bought the properties in 2010/ I think the sale was either lucky or clever because they got out just before the yen revaluation and with a small gain

They made an excellent purchase of the W hotel in san francisco in the summer of 2009/

Other than a small run in with the tax man decades ago the controlling family is typical wealthy singapore with a history of working together with some other big and reputable families in singabpore and hong kong i.e. this doesn't look anything like a typical fraud

I have no idea what the cash balance is for




yadayada

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Re: 0184.HK - Keck Seng Investments
« Reply #8 on: April 12, 2014, 06:37:33 AM »
Quote
(g) Fixed assets
(i) Investment property
Investment properties are land and/or buildings which are owned or held under a leasehold
interest (note 1(i)) to earn rental income and/or for capital appreciation. These include land held
for a currently undetermined future use and property that is being constructed or developed for
future use as investment property.
Investment properties are stated at fair value, unless they are still in the course of construction
or development at the end of the reporting period and their fair value cannot be reliably
determined at that time.
Any gain or loss arising from a change in fair value or from the
retirement or disposal of an investment property is recognised in profit or loss. Rental income
from investment properties is accounted for as described in note 1(s)(ii).
When the Group holds a property interest under an operating lease to earn rental income
and/or for capital appreciation, the interest is classified and accounted for as an investment
property on a property-by-property basis. Any such property interest which has been classified
as an investment property is accounted for as if it were held under a finance lease (note
1(i)), and the same accounting policies are applied to that interest as are applied to other
investment properties leased under finance leases. Lease payments are accounted for as
described in note 1(i).
(ii) Hotel property
Hotel properties are stated at cost less accumulated depreciation (note 1(h)) and impairment
losses (note 1(j)).
So it looks like the VIC article is right about their hotels being worth more.

And the real estate could also be worth more, if they  are still technically under construction?

Quote
Profit from sale of properties in Macau rose to HK$96.4 million during the year as
compared to HK$14.3 million in 2011
so revenue there was 129 million i think. and 96 million in profit. This means a 4x mark up right?

So coming back to accounting rules
Quote
Property development 335,931 335,931
that is at cost. And not fair value.

Packer16

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Re: 0184.HK - Keck Seng Investments
« Reply #9 on: April 12, 2014, 06:38:24 AM »
They may be able to be sold a premium to book but the VIC report has the properties held for sale at HK$1.939 b versus a BV of HK$283.5 m.  These properties are appraised annually see footnote 29 (a) (i) and 12 (a) (i).  Is this amount of mark up believable?  If the financial statements are this far off using the fair value standard then I think the auditors would have a big problem with Keck's financial statements. 

For the hotels there may be some mark-up but if you look at there assumption for the Vietnam hotels @ 10x earning/FCF that is not cheap considering it is in Vietnam.  This marks up cost by about 150%.  If we look at NOI then BV is cap rate of 38% and the VIC report is 15%.  If we use the mid point we write-up $450m.  The other big hotel mark-up is SF about 100%.  I could not find the implied $109m of NOI but was only able to find about $58m.  So the BV is pretty close to the NOI/cap rate (7.8%).  So if you mark to BV the investment properties and Vietnam hotels to the mid point between VIC and BV is 40% of BV similar to Wheelock.

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« Last Edit: April 12, 2014, 07:26:24 AM by Packer16 »