China Merchants Holdings Pacific

[touzi]

According to the foreign currency sensitivity analysis in the last AR, a strengthening of USD against the "functional currency of each Group entity" has a positive impact on group profit in FY14. Similarly, a strengthening of RMB also has positive impact. How is that possible? Wouldn't a strengthening of USD imply a weakening of RMB? I would expect that functional currency are mainly RMB. Hope somebody can help to clarify. Thanks.

[Nick]

CM Pacific reports its numbers in HKD which in turn is pegged to the USD. So it can be quite confusing since 4 different currencies are at play here -

RMB (its cash income)
USD (a portion of its debts)
HKD (reporting currency and a portion of its debts)
SGD (dividend payouts)

(Vested)

[ksir]

Which basically means as long as RMB strengthen they are better off.
<vested near core>

[Jack31]

Added more recently with the weakening price. I dont really see a hugh downfall in profit, 9% yield at current price. In fact, I am quite excited about the next 2 quarter result. One time negative goodwill gain in Q415, with expected profit for all 3 new acqusitions. 7 cents will probably be maintain in FY15. BL should also see signifcant upside compared to last year. Jiurui still a big ? thou.
Q116 will see the completion of New toll gateway of Guihuang and full Quarter contribution from Gy & Gx. Let's see how it goes. Just hope rmb does not depreciate too much.

[fundamentalman]

nice div yield, but frequent Right issue is a turn off.

[Nick]

nice div yield, but frequent Right issue is a turn off.

A solitary rights issue (which was > 99% subscribed by the controlling shareholder) is frequent?

[ksir]

nice div yield, but frequent Right issue is a turn off.

A solitary rights issue (which was > 99% subscribed by the controlling shareholder) is frequent?

Don't forget about the "premium" right issue price. Not unlike the subsidy from the controlling shareholder i reckon?

[Greenrookie]

Had always wanted to make some stress test calculation. Below copied from my blog.

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Taken from 2014 AR. The bulk of loans are loans F and G which are in USD and depend on BBA libor rate. CMPH loans are all amortized

Assume 7.78 HKD to 1 USD and interest rate as what is stated in 2014 AR.

The amount of money to be paid over the next few years including interest cost are:

2016: 703 mio HKD
2017: 751 mio HKD
2018: 890 mio HKD
2019: 879 mio HKD

Capex for 2015 9M is the highest for the last 6 years, at 150 mio. Assume
A higher capex of 200 mio due to more expressways and the fact that Guixing is not fully completed. And that they need to pay 743 mio HKD. As dividends for the enlarged base

They need to generate OCF of 1.66 billion of HKD, and they need to add 100 mio for Q4. Not tall order.

2018 is the year they need to pay the highest loan. 890 mio. So they need an OCF of about 1.85 billion.

If we annualise 9 M 2015 results, OCF will be about 2 billion. So there is some buffer. There is excluding the 3 new acquisitions' contributions.

Assume interest rate increase by 1% in 2016( unlikely if u ask me), 2% in 2017 and normalized at 3% in 2018.

Repayments of loans will be:

2016: 731 mio
2017: 798 mio
2018: 941 mio

Assume HKD weakens by 10%, 8.85HKD to 1 US dollar

2016: 750 mio
2017: 810 mio
2018: 971 mio

Assume double whammy of strengthening USD and hiking of interest:

2016: 778 mio
2017: 857 mio
2018: 1.22 bio

If the company can generated 2 billion of OCF, it can still maintain dividends in the double whammy situation.

Hence, I think we should seriously worry more about the operating business than what many people are harping on, currency and interest hike.

I wanted to post this before their annual results so that readers can see for themselves what OCF they can generate for themselves with a quarter of contribution of 3 expressways.

If full year 2015 OCF hits 1.8 - 2 billion, I will sleep well.

If the tolls start falling due to economic slowdown (less goods transport around the country), I will study how big the fall is and decide if I will reduce or cut loss.

[Jack31]

nice div yield, but frequent Right issue is a turn off.

Not being rude here, but your post really make me laugh.

@Greenrookie, thanks for the analysis.

[starcraft_76]

http://infopub.sgx.com/FileOpen/FY2015-P...eID=391037

3.5cts final dividend declared. Dividend payout for FY2015 is 96%

FCF (HKD)
2014 - 1705 mio
2015 - 1516 mio

Basic EPS (HK Cents)
2014 - 85.26
2015 - 45.43

Diluted EPS (HK Cents)
2014 - 67.31
2015 - 45.43