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The guys at Third Avenue talked about (and invested in) Shangri-La Asia in this 1Q23 letter.
Shangri-La Asia has a couple of business segments - Hotels, mgt contracts, holding investment properties (commercial/serviced apartments) and a small real estate development arm. The hotels portion already accounts for >90% of the revenue.
Is there a chance that Godfather Kuok eventually decides to do a "Capitaland"?
INTERNATIONAL REAL ESTATE VALUE FUND AS OF MARCH 31, 2023
Fund Management initiated a position in luxury hotel owner and operator Shangri-La Asia Ltd (“Shangri-La”) during the quarter. Shangri-La owns a portfolio of 83 high quality hotels, totaling over 35,000 rooms. The company also manages an additional 22 hotels on behalf of third parties. The vast majority of hotels operate under the five-star Shangri-La brand, with demand for Shangri-La rooms overwhelmingly powered by the Chinese consumer. Shangri-La’s estimates approximately 70% of preCOVID room demand for hotels in mainland China, Hong Kong and Singapore came from the Chinese consumer.
The valuation disconnect is best viewed by looking at Shangri-La’s discount compared to the value of its tangible real estate assets net of liabilities (net asset value). On the companies’ appraised book value, shares currently trade at just one third of ‘private’ market value. However, Shangri-La is tightly controlled by the Kuock Group, such that a significant resource conversion event is unlikely. Rapid improvement in hotel demand fundamentals should act as a meaningful share price catalyst in coming periods, including a potential reinstatement of the dividend.
https://thirdave.com/wp-content/uploads/...Letter.pdf
Shangri-La Asia has a couple of business segments - Hotels, mgt contracts, holding investment properties (commercial/serviced apartments) and a small real estate development arm. The hotels portion already accounts for >90% of the revenue.
Is there a chance that Godfather Kuok eventually decides to do a "Capitaland"?
INTERNATIONAL REAL ESTATE VALUE FUND AS OF MARCH 31, 2023
Fund Management initiated a position in luxury hotel owner and operator Shangri-La Asia Ltd (“Shangri-La”) during the quarter. Shangri-La owns a portfolio of 83 high quality hotels, totaling over 35,000 rooms. The company also manages an additional 22 hotels on behalf of third parties. The vast majority of hotels operate under the five-star Shangri-La brand, with demand for Shangri-La rooms overwhelmingly powered by the Chinese consumer. Shangri-La’s estimates approximately 70% of preCOVID room demand for hotels in mainland China, Hong Kong and Singapore came from the Chinese consumer.
The valuation disconnect is best viewed by looking at Shangri-La’s discount compared to the value of its tangible real estate assets net of liabilities (net asset value). On the companies’ appraised book value, shares currently trade at just one third of ‘private’ market value. However, Shangri-La is tightly controlled by the Kuock Group, such that a significant resource conversion event is unlikely. Rapid improvement in hotel demand fundamentals should act as a meaningful share price catalyst in coming periods, including a potential reinstatement of the dividend.
https://thirdave.com/wp-content/uploads/...Letter.pdf