China Merchants Holdings Pacific

[zz...]

The theoretically most accurate way of amortizing intangibles is the fair value modelling of intangibles on a cash generating basis over the remaining tenure.

However as a matter of practice due to the fact that such a method often introduces significant accounting judgements, most accountants will either expense using a prefixed amortization curve or set certain criterias and formulae in which a portion of the revenue "unlocked" is translated into amortization.

A lot of good information, thanks. So in this case, they have routine amortization but they will also book impairment of intangible assets if there is drop in tariff volumes?

[CityFarmer]

The theoretically most accurate way of amortizing intangibles is the fair value modelling of intangibles on a cash generating basis over the remaining tenure.

However as a matter of practice due to the fact that such a method often introduces significant accounting judgements, most accountants will either expense using a prefixed amortization curve or set certain criterias and formulae in which a portion of the revenue "unlocked" is translated into amortization.

A lot of good information, thanks. So in this case, they have routine amortization but they will also book impairment of intangible assets if there is drop in tariff volumes?

I didn't read the company AR, but typically the impairment policy should be explained in the AR. You may want to take a look at the AR.

[Nick]

China Merchants Holdings (Pacific) divests its property development business in New Zealand for HK$356 million

http://infopub.sgx.com/FileOpen/Disposal...eID=257865 [Press Release]

http://infopub.sgx.com/FileOpen/Appendix...eID=257864 [Valuation Report]

http://infopub.sgx.com/FileOpen/Disposal...eID=257863 [SGX Announcement]

1) The value of the disposal is the same as the value agreed upon for the Jiurui transaction last year.

2) The Purchaser is CMG.

3) Overall, this is a good deal since the Group gets to cash out from a loss making unrelated legacy business at a decent price and can reinvest the proceeds to new roads or repay debt.

4) Any ideas whether is the deal profitable bearing in mind the impairments over the past year ?

(Vested)

[Jack31]

Sounds like a good deal. The only downside may be cmph(NZ) juz started to make profit past 2Q. And NZ property is moving up. But I believe management should have taken it into consideration that's why selling above valuation?

hope they manage to acquire another toll road in the near future.

[Nick]

China Merchants Hldgs (Pacific) : Divests NZ property business for HK$356m (DBSV)
China Merchants Hldgs (Pacific)
BUY S$0.86
STI : 3,210.18
Price Target : 12-Month S$ 1.07
Divests NZ property business for HK$356m

China Merchants Holdings Pacific announced on Friday that it has entered into a conditional sale and purchase agreement to sell its entire New Zealand property business to sister company China Merchants Properties Development Ltd for HK$356m.

The sale is targeted for completion in 4Q13, and the Group will realise a gain of c. HK$111m on its P&L. The divestment and consideration amount (which is about 7Scts per share) is in line with our expectations and will help the Group to focus on its core toll road business, while improving its balance sheet slightly.

Next for the Group will be to look for more toll road acquisitions to grow its business.

We maintain our BUY call and DCF-based TP of S$1.07, which assumes the outstanding convertible bonds will be converted.

http://kfc1973-stock.blogspot.sg/2013/10...vests.html [Report]

(Vested)

[HitandRun]

Weird stuff:

Based on 2Q13 results,

Assets held for sale 423,093
Liabilities held for sale 132,490
Net Assets 290,603

Notes to balance sheet

(ii) The property development segment is presented as a disposal group held for sale.

IF sales of property business is $356 m, how can gain be $111?? Does the delta represent 3 months of depreciation?

[Nick]

Weird stuff:

Based on 2Q13 results,

Assets held for sale 423,093
Liabilities held for sale 132,490
Net Assets 290,603

Notes to balance sheet

(ii) The property development segment is presented as a disposal group held for sale.

IF sales of property business is $356 m, how can gain be $111?? Does the delta represent 3 months of depreciation?

http://infopub.sgx.com/FileOpen/Disposal...eID=257863 - pg 2, the 111 million gains included a foreign currency translation movement but this is removed in the comprehension income.

[HitandRun]

Alamak, a good analyst should ignore the funky accounting rules and conclude that net gain is just $65 million.....

[Jacmar]

a good article on the toll road scene in PRC. I tot CMP compares favourably in a few of the criteria mentioned

[Nick]

China Merchants Holdings (Pacific) Limited wishes to announce that it will release its financial results for the third quarter ended 30 September 2013 on Thursday, 7 November 2013, after trading hours.

(Vested)