China Merchants Holdings Pacific

[yourusualkid]

CMPac $0.935 - How To Grow A Dragon

CMPac is a China SOE backed cash generative defensive infrastructure business with exposure in China's toll roads. It is a Singapore incorporated company with no finanical engineering (non business trust) and boast of sustainable 7 cents dividends payable twice a year. At 93.5 cents and dividend yield of 7.5%, CMPac is rare Garang Guni Gem riding on the back of parent China Merchant Group's sharpened focus to drive growth in a unit that boast of a 10 year track record in China toll road industry. Concerns over its pure China based business have been overplayed given its strong cashflows and management track record in enhancing shareholders' wealth through consistently growing dividend stream.

Where's the article from? Just wondering.

Authored by the poster

Neat.

[greengiraffe]

CMPac $0.935 - How To Grow A Dragon

CMPac is a China SOE backed cash generative defensive infrastructure business with exposure in China's toll roads. It is a Singapore incorporated company with no finanical engineering (non business trust) and boast of sustainable 7 cents dividends payable twice a year. At 93.5 cents and dividend yield of 7.5%, CMPac is rare Garang Guni Gem riding on the back of parent China Merchant Group's sharpened focus to drive growth in a unit that boast of a 10 year track record in China toll road industry. Concerns over its pure China based business have been overplayed given its strong cashflows and management track record in enhancing shareholders' wealth through consistently growing dividend stream.

Where's the article from? Just wondering.

Authored by the poster

Neat.

Thank you buddy. I penned my thoughts via a lot of cutting and pasting as I felt that there is little need to reinvent the wheel.

Moreover, both the analysts that are following the stock (they may have or may not) have not sharpened their focus on the attraction of CMP. Not taking away credit from anyone, I m relying on forecasts from respective sources to convince myself that this is an overlooked infrastructure stock with exposure to China's massive economic development.

Whilst there are comparable listed toll road operators in HKSE, CMG deliberate attempts to shape a Pan-China based toll road vs the largely provincial based operators will eventually bring out the attraction in CMG.

CMG carries the Chinese flag in China's global push for infrastructure development. For many years they have been extremely patient in running CMP. This is rightly so when attractive deals are hard to come by during the boom years where credit is readily available and ability to string deals are largely due to who's who and where.

Given the transitioning of Chinese economy to a domestic consumption driven one and the cleaning up of weak but connected businessmen, CMP is well positioned for the consolidation of quality toll roads in China. Jiurui is an excellent example but both analysts failed to hammer away on management's capability to revive the deal.

CMP's liquidity has been thin historically and as such is out of the radar of many fun managers. Analysts may also been light on their coverage as CMP is probably considered as a non-core coverage (with potential) that historically won't write much commission for sales team.

CMP has CMG's absolute commitment as judge from the dividends declared but continued to accrue as free cash float on CMP's books. In addition the RCPS that were issued when toll roads were first injected back in 2004 remains unconverted - yielding another source of cheap funding for CMP.

Anyway, if we use our logic - we pay ERP daily and many times over each day. If ERP is listed would we buy?

Vested
Core Holdings
Garang Guni

[Jack31]

CMPac $0.935 - How To Grow A Dragon

CMPac is a China SOE backed cash generative defensive infrastructure business with exposure in China's toll roads. It is a Singapore incorporated company with no finanical engineering (non business trust) and boast of sustainable 7 cents dividends payable twice a year. At 93.5 cents and dividend yield of 7.5%, CMPac is rare Garang Guni Gem riding on the back of parent China Merchant Group's sharpened focus to drive growth in a unit that boast of a 10 year track record in China toll road industry. Concerns over its pure China based business have been overplayed given its strong cashflows and management track record in enhancing shareholders' wealth through consistently growing dividend stream.

Where's the article from? Just wondering.

Lol, from GG investment pte ltd (company not listed yet, else I will be vested)
Nice read up. Thanks GG. Sometime I just wonder if we are lucky that cmp is an
s-chip, thus we are able to get it at a cheaper price (with a CHINA word in it, many people will just skip without looking at it, my good friend is one of it, once I told him, take a look at cm pacific, he: "China stock?" me: "yes" he: "ok" (Turn around and face his computer)

I added some lots a few days back impulsively after the announcement and sold some today for a small profit after realizing I'm maybe abit overly vested. (Eating into my war chest for the day when stock crash) Still rem GG 1st word to me in this forum:"never fall in love with stock". Need to keep this in mind for cmp.

Btw, Didn't saw drizzt article on this, probably have to wait for the result to be out in a few weeks.

[greengiraffe]

CMPac $0.935 - How To Grow A Dragon

CMPac is a China SOE backed cash generative defensive infrastructure business with exposure in China's toll roads. It is a Singapore incorporated company with no finanical engineering (non business trust) and boast of sustainable 7 cents dividends payable twice a year. At 93.5 cents and dividend yield of 7.5%, CMPac is rare Garang Guni Gem riding on the back of parent China Merchant Group's sharpened focus to drive growth in a unit that boast of a 10 year track record in China toll road industry. Concerns over its pure China based business have been overplayed given its strong cashflows and management track record in enhancing shareholders' wealth through consistently growing dividend stream.

Where's the article from? Just wondering.

Lol, from GG investment pte ltd (company not listed yet, else I will be vested)
Nice read up. Thanks GG. Sometime I just wonder if we are lucky that cmp is an
s-chip, thus we are able to get it at a cheaper price (with a CHINA word in it, many people will just skip without looking at it, my good friend is one of it, once I told him, take a look at cm pacific, he: "China stock?" me: "yes" he: "ok" (Turn around and face his computer)

I added some lots a few days back impulsively after the announcement and sold some today for a small profit after realizing I'm maybe abit overly vested. (Eating into my war chest for the day when stock crash) Still rem GG 1st word to me in this forum:"never fall in love with stock". Need to keep this in mind for cmp.

Btw, Didn't saw drizzt article on this, probably have to wait for the result to be out in a few weeks.

Hi Jack,

Thanks for your compliments. GG LLP is a long neck green face Garang Guni fund. The easier money lies with dydx management - more diverse and sexy and more importantly turbo-charged - exactly the deep value and superior return type that many retailers will associate with.

I like CMP due to its "China" pedigree. They have been around since they emerged in 2004. They have paid 54 cents in dividends back to shareholders since and continues to focus on driving that. The SOE parent has put the money on the table (dividends paid but remains accrued and the lack of indication as to when RCPS when be converted).

CMG is a no nonsense Chinese government back SOE

http://wwwen.cmhk.com/

and CMP's direct parent is a strategic player in China's toll road industry:

http://www.hj.net.cn/en_index/

I encounter various similar response when I mentioned China Merchant Pacific to friends who are looking for quality investment ideas - "China - sure or not..."

Once bitten, twice shy and that is the problem with ignorant association and bad experience.

Anyway, we can never rule out the possibility that some SWF like Temasek may eventually take a strategic stake in CMP especially when it reaches a suitable size. Fully diluted market cap now is around S$1bn, still a long way from management's target of around S$6bn for a potential dual listing on HKSE as previously indicated in The Edge interview. However, the obstacles for acquisitions has been made easier via the ability to issue new shares.

While it is true never to fall in love with a stock, there is nothing stopping us from Buying Till It Hurts...

Vested
GG

[Jacmar]

I encounter various similar response when I mentioned China Merchant Pacific to friends who are looking for quality investment ideas - "China - sure or not..."

Vested
GG

S-Chips has burned so many investors that it has given rise to shortist working actively against it. Even CMPH with so low free float and consistent high div yield is not spared. This explains the long history of share under performance by CMPH. The indiscriminate shorting is crazy and going to get them burn again. Anyway good for me as I get the extra 4% on top of the 7.5%.... cool. Thanks shortist and pls borrow from me some more. If you need more let me know and I will go and buy from the mkt to lend to you. hehe.

[greengiraffe]

I encounter various similar response when I mentioned China Merchant Pacific to friends who are looking for quality investment ideas - "China - sure or not..."

Vested
GG

S-Chips has burned so many investors that it has given rise to shortist working actively against it. Even CMPH with so low free float and consistent high div yield is not spared. This explains the long history of share under performance by CMPH. The indiscriminate shorting is crazy and going to get them burn again. Anyway good for me as I get the extra 4% on top of the 7.5%.... cool. Thanks shortist and pls borrow from me some more. If you need more let me know and I will go and buy from the mkt to lend to you. hehe.

There is no outright shorting... Its arbitrage by professional traders - once they manage to long 1.25% CB, they borrow scripts to short while waiting for conversion. The main thing here is with increased supply of CMP, there must be secret admirers accumulating CMP alongside with buddies here - that can only be good...

GG

[Jacmar]

I encounter various similar response when I mentioned China Merchant Pacific to friends who are looking for quality investment ideas - "China - sure or not..."

Vested
GG

S-Chips has burned so many investors that it has given rise to shortist working actively against it. Even CMPH with so low free float and consistent high div yield is not spared. This explains the long history of share under performance by CMPH. The indiscriminate shorting is crazy and going to get them burn again. Anyway good for me as I get the extra 4% on top of the 7.5%.... cool. Thanks shortist and pls borrow from me some more. If you need more let me know and I will go and buy from the mkt to lend to you. hehe.

There is no outright shorting... Its arbitrage by professional traders - once they manage to long 1.25% CB, they borrow scripts to short while waiting for conversion. The main thing here is with increased supply of CMP, there must be secret admirers accumulating CMP alongside with buddies here - that can only be good...

GG

Hi GG, u need to explain to me how this works. U borrow at >4% and yr CBs gives 1.25%. In the process u are in the hole for a few % while waiting for the conversion. They can convert at any time now but why pay the extra % to wait for conversion.

[Jack31]

Another thing I like abt the management is whenever they issue share, it's always above the market price. Couple with share issued shd not be below NAV, it somehow provide an "insurance" for minority investor. Have seen some reits/trust issuing share at discount to market price to private investor and price was way below NAV.. -_-" it's really so unfair to minority investor..
the CB that was price at 0.84 was also issue when market price was abt 70c, which I think was a fair deal.

[greengiraffe]

I encounter various similar response when I mentioned China Merchant Pacific to friends who are looking for quality investment ideas - "China - sure or not..."

Vested
GG

S-Chips has burned so many investors that it has given rise to shortist working actively against it. Even CMPH with so low free float and consistent high div yield is not spared. This explains the long history of share under performance by CMPH. The indiscriminate shorting is crazy and going to get them burn again. Anyway good for me as I get the extra 4% on top of the 7.5%.... cool. Thanks shortist and pls borrow from me some more. If you need more let me know and I will go and buy from the mkt to lend to you. hehe.

There is no outright shorting... Its arbitrage by professional traders - once they manage to long 1.25% CB, they borrow scripts to short while waiting for conversion. The main thing here is with increased supply of CMP, there must be secret admirers accumulating CMP alongside with buddies here - that can only be good...

GG

Hi GG, u need to explain to me how this works. U borrow at >4% and yr CBs gives 1.25%. In the process u are in the hole for a few % while waiting for the conversion. They can convert at any time now but why pay the extra % to wait for conversion.

They have their trading system set up for riskless arbitrage hence the process would have factored in the borrowing costs of the scripts - ie once they get the cheaper CBs, they will sell borrowed shares immediately while waiting for the converted scripts to be credited for the return of the borrowed scripts.

Hope that clarifies...

GG

[greengiraffe]

I did a quick and dirty on CMP 1.25% CB due 2017:

Original issue size is HK$1.163bn.

As of 23/7/14:

http://infopub.sgx.com/Apps?A=COW_CorpAn...cement.pdf

A total of HK$87m has been converted into 16.53m shares.

Based on the outstanding HK$1.076bn, at current conversion price of S$0.826, a potential 205.6m shares remains in the pipeline.

As CMP does not reveal the CB holders statistics, we can only assume that the CBs are in the hands of bond funds and high net worth individuals.

Vested
GG