Hotung Investment (和通）

Anyone looked at this company before? Lots of cash and trading at a discount to NAV. Plus good dividend. And company has been consistently buying back shares.

Hotung is a forgotten listed VC. Just like other investment holdings, there is usually a discount tagged to the reported book value.

Ignoring the geographical coverage and parentage, Hotung is trading at a steeper discount than K1. Moreover, Hotung has negligible debt and hence one can simply look at how much you are paying for cash and investments.

About 1/3 is cash with the balance in investments. Valuing investments is a more difficult tasks with VC given that the time horizon associated with the realisation of the investments is uncertain. This includes that of investments that have successfully listed as well.

Nevertheless, for Hotung that pays good dividends and doing consistent sharebuys, I personally do not think that anyone with a long enough time horizon will go too far wrong.

Just hope that it may be heading for delisting at a reasonable valuation in the future.

(19-12-2012, 04:45 PM)Share Investor Wrote: Anyone looked at this company before? Lots of cash and trading at a discount to NAV. Plus good dividend. And company has been consistently buying back shares.

S&P has a very good coverage on Hotung. The following is their financial forecast for FY2012 and FY2013.

FY Dec. 2011 2012E 2013E
Book Value (TW cents) 653.64 695.01 709.16
Cash Flow (TW cents) 26.4 34.9 36.6
Reported Earnings (TW cents 26.4 34.9 36.6
Dividend (TW cents) 25.8 28.1 29.5
Payout Ratio (%) 97.2 80.0 80.0
PER (x) 13.4 10.1 9.7
P/Cash Flow (x) 13.4 10.1 9.7
P/Book Value (x) 0.5 0.5 0.5
Dividend Yield (%) 7.3 7.9 8.3
ROE (%) 3.8 5.2 5.2
Net Gearing (%) 0.0 0.0 0.0

http://research.sgx.com/reports/rpt_view.pl?id=6817

vested

Other than the low ROE, the dividend yield looks quite fine.

A little curious here, can they pay out dividends only from retained earnings or are they something like a business trust where dividends can be paid out even with negative earnings? thanks in advance

The dividend distribution is restricted by solvency test of Bermuda Companies Act.

The latest amended Solvency Test should be :
1. the company must be able to pay its debts as they become due in the normal course of business.
and
2. the value of the company's assets must be greater than the value of its liabilities.

(20-12-2012, 11:26 AM)cyclone Wrote: The dividend distribution is restricted by solvency test of Bermuda Companies Act.

The latest amended Solvency Test should be :
1. the company must be able to pay its debts as they become due in the normal course of business.
and
2. the value of the company's assets must be greater than the value of its liabilities.

Hotung Investments has already proposed to write of all accumulated losses of the company by offsetting it against the share capital.

Hotung is net cash.

(19-12-2012, 09:13 PM)greengiraffe Wrote: Nevertheless, for Hotung that pays good dividends and doing consistent sharebuys, I personally do not think that anyone with a long enough time horizon will go too far wrong.

Just hope that it may be heading for delisting at a reasonable valuation in the future.

(19-12-2012, 04:45 PM)Share Investor Wrote: Anyone looked at this company before? Lots of cash and trading at a discount to NAV. Plus good dividend. And company has been consistently buying back shares.

In the good old days we used to call it Ho-Tung in Hokkien. Not sure if we can Tung as long

IIRC it is a Taiwanese VC. Are there any catalyst for delisting?

(21-12-2012, 11:25 PM)specuvestor Wrote:

(19-12-2012, 09:13 PM)greengiraffe Wrote: Nevertheless, for Hotung that pays good dividends and doing consistent sharebuys, I personally do not think that anyone with a long enough time horizon will go too far wrong.

Just hope that it may be heading for delisting at a reasonable valuation in the future.

(19-12-2012, 04:45 PM)Share Investor Wrote: Anyone looked at this company before? Lots of cash and trading at a discount to NAV. Plus good dividend. And company has been consistently buying back shares.

In the good old days we used to call it Ho-Tung in Hokkien. Not sure if we can Tung as long

IIRC it is a Taiwanese VC. Are there any catalyst for delisting?

I don't mind continuing to receive dividend. Anyone here has any comments on their track record compared to peers? I find their impairment charge to be rather high. Is it typical of VC business?

And with most of their investment in Taiwan and PRC, won't it be better to list there instead of Singapore? Perhaps company will change the listing location one day?

Vested.

Daily Share buyback of 900 lots between $0.15 to $0.151. The last share buyback was in 15 Nov 2012 1 Day after their 3Q result announcement.

http://info.sgx.com/webcorannc.nsf/Annou...endocument

This is excellent market signalling by a company that is trading way below books and sitting on net cash.

(26-12-2012, 05:48 PM)ngcheeki Wrote: Daily Share buyback of 900 lots between $0.15 to $0.151. The last share buyback was in 15 Nov 2012 1 Day after their 3Q result announcement.

http://info.sgx.com/webcorannc.nsf/Annou...endocument