ANNOUNCEMENT
CONVERTIBLE BONDS DUE 2017 -
CANCELLATION OF BONDS DUE TO CONVERSION
The board of directors (the “Board”) of China Merchants Holdings (Pacific) Limited (the “Company”) wishes to announce that HK$19,000,000 in aggregate principal amount of HK$1,163,000,000 1.25 per cent. convertible bonds due 2017 (credit enhanced until 2015) (the “Convertible Bonds”) have been converted and cancelled pursuant to the exercise of conversion rights by the holder thereof (the “Conversion”). Accordingly, following such conversion and cancellation, the aggregate principal amount of the Convertible Bonds remaining outstanding as of 4 March 2015 is HK$752,000,000.
Arising from such conversion, 3,630,946 new ordinary shares in the capital of the Company (“Shares”) have been issued at the conversion price of S$0.826 and the total number of issued and paid-up Shares of the Company has increased to 1,057,701,024.
BY ORDER OF THE BOARD
Lim Lay Hoon
Company Secretary
Singapore, 4 March 2015
Based on outstanding HK$752m worth of CBs, the potential shares to be converted at $0.826 is 143.709m.
(09-03-2015, 05:21 PM)Nick Wrote: Closed strongly at $1.10 thus making a new all time high. A dividend yield of 6.36% backed by solid (and growing) cash generation while repaying substantial debt regularly. The low gearing gives substantial headroom for new M&A. Let's see how this goes.
Rain or shine must continue to update... CMP corrected from intra week high of 1.11 - probably due to controlled release of supply of convertible Bonds...
I suspect there will be more conversions to be filed over the next few days...
By the way, I just re-checked - CMP was last interviewed by The Edge on 1 Nov 13, not 2011 as i previously erroneously stated.
CHINA MERCHANTS HOLDINGS (PACIFIC) LIMITED
(Incorporated in the Republic of Singapore)
Company Registration No. 198101278D
ANNOUNCEMENT
CONVERTIBLE BONDS DUE 2017 -
CANCELLATION OF BONDS DUE TO CONVERSION
The board of directors (the “Board”) of China Merchants Holdings (Pacific) Limited (the “Company”) wishes to announce that HK$17,000,000 in aggregate principal amount of HK$1,163,000,000 1.25 per cent. convertible bonds due 2017 (credit enhanced until 2015) (the “Convertible Bonds”) have been converted and cancelled pursuant to the exercise of conversion rights by the holder thereof (the “Conversion”). Accordingly, following such conversion and cancellation, the aggregate principal amount of the Convertible Bonds remaining outstanding as of 11 March 2015 is HK$735,000,000.
Arising from such conversion, 3,248,742 new ordinary shares in the capital of the Company (“Shares”) have been issued at the conversion price of S$0.826 and the total number of issued and paid-up Shares of the Company has increased to 1,061,249,766
.
BY ORDER OF THE BOARD
Lim Lay Hoon
Company Secretary
Singapore, 11 March 2015
Based on outstanding HK$735m worth of CBs, the potential shares to be converted at $0.826 is 140.460m.
Admittedly this is side tracking... however given that basic infrastructure is considered as a closed market to foreigners (MIIF aside as they have gotten a lemon), the way to play the rising affluence of Chinese consumers remains to be vested in well run SOE backed companies...
When Transurban paid $7 billion less than a year ago to acquire five tollroads owned by Queensland Motorways, investors were stunned at the high price.
But less than a year later, Australian investment group IFM has gone a step further, paying $US5.7 billion ($7.4 billion) to acquire a motorway in the US, the Indiana Toll Road.
The acquisition, the largest in IFM's history, underscores the hunger investors have for established tollroads amid expectations they will benefit from increased traffic growth as oil prices fall and economies rebound.
The Indiana Toll Road's previous owners, Macquarie and Spanish tollroad operator Cintra, could not generate enough income from the 253-kilometre highway, which opened in 1956, because they had financed it too aggressively before the global financial crisis, the road's gearing was running at around 80 per cent.
IFM has opted for a far more conservative financial structure by putting in more than $4 billion of equity, keeping gearing at below 50 per cent.
It is also hopeful that traffic flows will improve as the US economy strengthens.
"All toll roads, particularly in the northern hemisphere, were hit by the global financial crisis," IFM's head of infrastructure, Michael Hanna said. "It's a good time to buy when you've seen the drop off and then the US is back on its feet."
US growth is projected to exceed 3 per cent in 2015-16, with domestic demand partially supported by lower oil prices, according to the International Monetary Fund.
Brett Himbury, IFM's chief executive, points out the Indiana Toll Road runs through one of the most significant freight corridors in the US. The road links highways leading to major east coast cities and northwestern Indiana, as well as Chicago, and the western US and generates most of its revenues from truck traffic.
Meanwhile, fears that Transurban overpaid for Queensland Motorways are receding as the company's stock continues to trade above $9 after hitting a new high of $9.45 in February.
I slowly picking up the dynamics of China's listed toll road sector especially those listed on HKSE based on cimb's big report dated Jul 14.
AAStocks is one of the better sites that provide good overview on HKSE stocks. The comparisons are based on the road and rail sector companies.
CMP's direct comparisons based on mkt cap are as follows:
Zhejiang, Jiangsu, Hopewell Infra (not SOE linked and suffered derating due to cut in tolls in Guangdong - info via a buddy), Yuexiu, Shenzhen Exp, Sichuan and Anhui.
Based on div yield ranking (excl Hopewell) - Anhui 5.54%, Jiangsu, Yuexiu, Zhejiang, Shenzhen 3.79%.
Share price performance of these companies whilst they appear defensive (stable earnings and DPS in general over the last few years) remained affected by sentiment towards China stocks in general - bottomed in 2011 and only recovered recently inline with strong performance of mainland stocks.
Purely based on dividend yield. CMP currently trades on 6.63% historical and 6.97% forward (assuming DPS 7 unchanged from 1-for-20 bonus issue). The room for yield compression remains given the gap between the next highest HKSE peer.
However, as highlighted by buddy - yield is just a benchmark that excludes other benchmarks like P/B, growth outlook of portfolio of roads and hence forward cashflows and DPS.
17-03-2015, 11:11 PM (This post was last modified: 17-03-2015, 11:13 PM by greengiraffe.)
Mother of the The Dragon - CM Hua Jian Highway Investment Co
I m repeatedly conducting my forensic studies on any linkages to CMP.
I m recooking old ingredients here. Today I am revisiting the Parentage, China Merchant Hua Jian Highway Investment Co Ltd
While CMP has made positive strides over the years, it appears that CMP remains work in progress notwithstanding the Mother's "focus" on the only investment company in which the Mother have majority control.
Interestingly, despite CMP being majority owned and is within the same parentage, being listed on SGX and perhaps smaller in mkt cap resulted in CMP offering the highest dividend yield to HKSE listed peers (pls refer to earlier analysis and links to aastock universe).
With Mother driving CMP, hopefully CMP valuations will close in on HKSE listed peers as the baby dragon progressively build up its track record via acquisitions and organic growth on existing road portfolio.
Hua Jian's Investment Projects via their listed interests and the location of the roads in which the listed interests own is clearly reflected via the following link:
Note that most of the listed interests are largely provincial based and so far CM Pac appears to be the only vehicle with interests in roads spread over different parts of China. Perhaps this is how Hua Jian intends to differentiate CM Pac from the rest of the other listed vehicles.
Hua Jian's interests in CM Pac on a fully diluted basis will be watered down to 60.6% assuming full conversion of outstanding convertible bonds due in 2017 at current prices.
Whilst, management in the previous public interview by The Edge in Nov 2013 stated that they could dilute their stake to 51%, there is really nothing preventing them from diluting to below that as seen in their much smaller holdings in other listed toll road companies both in China and HKSE.
Following the recent Jiurui acquisition, the question now will be the speed in which CM Pac will be acquiring bearing in mind that the parent has stated an optimal gearing ratio of 60% for CM Pac as she acquires.
In addition, CM Pac is likely to acquire only if she can assume controlling stake in the project as seen from the acquisitions over the years. Even though, Hua Jian owns a diverse portfolio of projects, CM Pac has yet to acquire less than majority stakes till now.
CM Pac is a "clean structure" - a company - it does not pay management fees like business trusts that typically owns infrastructure assets. Hence dividends are basically driven by cashflows generated by normal operations, ie no creative accounting.
I slowly picking up the dynamics of China's listed toll road sector especially those listed on HKSE based on cimb's big report dated Jul 14.
AAStocks is one of the better sites that provide good overview on HKSE stocks. The comparisons are based on the road and rail sector companies.
CMP's direct comparisons based on mkt cap are as follows:
Zhejiang, Jiangsu, Hopewell Infra (not SOE linked and suffered derating due to cut in tolls in Guangdong - info via a buddy), Yuexiu, Shenzhen Exp, Sichuan and Anhui.
Based on div yield ranking (excl Hopewell) - Anhui 5.54%, Jiangsu, Yuexiu, Zhejiang, Shenzhen 3.79%.
Share price performance of these companies whilst they appear defensive (stable earnings and DPS in general over the last few years) remained affected by sentiment towards China stocks in general - bottomed in 2011 and only recovered recently inline with strong performance of mainland stocks.
Purely based on dividend yield. CMP currently trades on 6.63% historical and 6.97% forward (assuming DPS 7 unchanged from 1-for-20 bonus issue). The room for yield compression remains given the gap between the next highest HKSE peer.
However, as highlighted by buddy - yield is just a benchmark that excludes other benchmarks like P/B, growth outlook of portfolio of roads and hence forward cashflows and DPS.
CONVERTIBLE BONDS DUE 2017 -
CANCELLATION OF BONDS DUE TO CONVERSION
The board of directors (the “Board”) of China Merchants Holdings (Pacific) Limited (the “Company”) wishes to announce that HK$16,000,000 in aggregate principal amount of HK$1,163,000,000 1.25 per cent. convertible bonds due 2017 (credit enhanced until 2015) (the “Convertible Bonds”) have been converted and cancelled pursuant to the exercise of conversion rights by the holder thereof (the “Conversion”). Accordingly, following such conversion and cancellation, the aggregate principal amount of the Convertible Bonds remaining outstanding as of 18 March 2015 is HK$719,000,000.
Arising from such conversion, 3,057,639 new ordinary shares in the capital of the Company (“Shares”) have been issued at the conversion price of S$0.826 and the total number of issued and paid-up Shares of the Company has increased to 1,064,557,405.
Based on outstanding HK$719m worth of CBs, the potential shares to be converted at $0.826 is 137.403m.
19-03-2015, 11:03 PM (This post was last modified: 19-03-2015, 11:06 PM by greengiraffe.)
CMP ($1.045) - A A A Rated
(A)New Net Asset Value (NAV) = Old NAV + Earnings Per Share (EPS) - (A)Dividend Per Share (DPS)
Based on a rare interview with CMP management by The Edge back in Nov 13, CMP can issue new shares for acquisition or new fund raising only if its share price is trading above NAV.
Ability Rating (NAV)
CMP has reported a steady rise in NAV (after full conversion of RCPS) for the last few years (in HK$/share)
2009 - 4.47
2010 - 4.62
2011 - 4.88
2012 - 5.34
2013 - 5.98
2014 - 6.10 (before full conversion of Convertible Bonds (CB) 2017), 5.98 (post full conversion of CB2017)
The latest fully diluted NAV HK$5.98 @ exch rate 0.177 = S$1.058.
In order for CMP to issue shares for acquisitions / raise new funding, CMP share price must be sustained above HK$5.98.
CMP maiden share issue for acquisition came last year when it partly paid in new shares @ S$0.98 for Jiurui Expressway. Interestingly, parent company exercised its rights to convert their decade old holdings of Redeemable Convertible Preference Shares (RCPS) on the same day the new shares were issued to ensure that the new share issued @ S$0.98 was marginally above its prospectus stated NAV of HK$6.01, exch rate 0.163 = S$0.9796. The new shares were issued at a premium to market traded range of $0.93 - $0.96 just prior to the Jiurui acquisition.
Attraction Rating (DPS)
CMP's toll earnings is a stable, recurrent and supposedly defensive business. While CMP has a dividend policy of at least 50% of net earnings since 2011, its payout ratio has been ranging between 54 - 89% since 2010.
It is highly likely for CMP to sustain the current DPS (if not growing it) in order to restrain the growth of NAV so as not to curtail its ability to fund future acquisitions via new share issue.
CMP has declared a 1-for-20 bonus issue to reward shareholders for their loyalty but should DPS be maintained at S$0.07post bonus issue, it is basically equal to a 5% raise to S$0.0735 based on the pre-bonus share capital.
At S$1.045 and projected FY15 DPS of S$0.0735, CMP is trading at a highly attractive dividend yield of 7.03%. It is also offering the highest yield amongst its listed HK toll road peers that trades on dividend yield ranging from 3.7 - 5.5%.
Both CIMB and DBS Vickers have projected earnings of HK$687m or fully diluted EPS of HK$0.572 (pre bonus). At DPS $0.0735, the projected payout ratio of 73% remains within historical range.
Acquisition Rating
CMP is currently trading marginally under its fully diluted NAV of S$1.058. Its projected dividend yield which is amongst the highest in its peer group will provide scope for yield compression (ie a rise in share price) based on the organic growth of its present road portfolio and potential acquisitions in the pipeline.
The continued conversion of CBs into new shares will further enhance trading liquidity and raise market cap of CMP, thus allowing fund managers who are previously restricted on both counts to invest.
CMP's parent company CM Hua Jian is a state backed SOE with solid track record in China's toll road sector. CM Hua Jian is mindful that HKSE listing provides better valuations relative to what CMP presently trades on. With that in mind - both substantial and minority shareholders' interests are well aligned. A systematic unfolding on acquisition road map for CMP will augur well for all shareholders' interests.
The chinese site of parent China Merchant Huajian Highway provides plenty of info that anyone who wishes to understand the China toll road industry can find. However, the info is mainly available in Chinese and can be quite hard to analyse as familiarity with China geography, laws and regulation is a pre-requisite.
The news included the regular meetings that Huajian management conducted with the different provinces. I think that such meetings are regular exchanges that is part of the Communist Party style market economic system.
There was also an interesting 2015 group meeting held on 13 Feb 15 in Beijing that had a comprehensive review of milestones achieved by Huajian in 2014 and the targets set out for 2015:
My limited understanding and translation included:
For 2014 in terms of expansion - Jiurui acquisition is a highlight. This was on top of acceleration in selected developments that will help lay good foundations in gaining control of majority stakes in some projects in the coming year and helping to shape leading edge in other strategic developments for 2020.
For 2015, there are 5 areas of focus:
i) sustain growth;
ii) enhanced strategic planning with detailed tactical plans;
iii) strengthened acquisition and asset swap capabilities;
iv) raised management ability and strengthen foundations of management capability;
v) enhanced business model via knowledge based developments.
Road infrastructure is a strategic industry that is key to economic development of any politically stable country. For China, with the focus being shifted from export base industries to domestic consumption going forward, a properly planned rollout is important especially when anti-corruption remains of importance to China.
Given that CM Huajian has an excelllent track record since 1993, majority controlled CM Pac is likely to play a key role to help lead CM Huajian's ambition.
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