China Merchants Holdings Pacific

[Jacmar]

Total current liabilities > total current assets not a concern?

Not a concern at all. if you look at the current liabilities you will see a line item(vi) of hk345m div payable to majority sh. Many sh ask how come the majority sh didn't ask for this n give CMHP interest free loan. Too good to be true right? I asked the CEO many agms ago and he said that majority sh has a lot of cash and don't need the money. Meantime CMHP got to enjoy this interest free loan, essentially this is what it is. I was sceptical nonetheless. If you think(my guess) about it majority sh has about nearly 80% ownership(now has dropped to maybe 71% with the dilution) and with the low interest rate environment, majority sh loss is minimal and being generous to minority. Will this "loan" be recall. Yes and the day will come when the majority sh drops to say 51% and interest rates starts to climb. until then continue to enjoy this interest free loan.

So if you treat this hk345m as a long term loan(non current liabilities instead), and rework the sums, your current liabilities/current assets will be about 1. The net gearing(loan/equity) would be about 41%, still very comfortable to gear up for infrastructure assets that is generating lots of FCF. Also interest cover is very high.

so overall, no concern.