China Merchants Holdings Pacific

[Jack31]

Thanks all for clarification. Ang mor no good, Paisey. lol..

[HitandRun]

Thanks all for clarification. Ang mor no good, Paisey. lol..

Jack31

Actually, it is not an issue of your Ang mor. It's an accountant's GAAP thingy.

The agreement states that the number of shares is in accordance with 98.5 cents per share. However, the bookkeeping guys CANNOT use the value of 98.5 cents in the books. According to the accounting standards, they have to look at the VWAP price of the counter the day before shares were issued. This VWAP price could be up or down depending on market sentiments and have got nothing to do with the actual contract price of 98.5 cents per share.

[Jack31]

Thanks hit&run. since number of share issue remain same, so no issue.
Initially I thought since change to issue at 0.945, more shares will be issue and hence more dilution.

Cmhp is going on a jog up the hill today.

[greengiraffe]

Cruising on Chinese highways with little traffic...

Sellers are mainly angmo house algos - likely to be the CB arbitragers with unsold inventory from conversions prior to CMP going xd.

Dividends in today. Enjoy.

Core Vested
GG

Thanks hit&run. since number of share issue remain same, so no issue.
Initially I thought since change to issue at 0.945, more shares will be issue and hence more dilution.

Cmhp is going on a jog up the hill today.

[Jacmar]

Total current liabilities > total current assets not a concern?

Not a concern at all. if you look at the current liabilities you will see a line item(vi) of hk345m div payable to majority sh. Many sh ask how come the majority sh didn't ask for this n give CMHP interest free loan. Too good to be true right? I asked the CEO many agms ago and he said that majority sh has a lot of cash and don't need the money. Meantime CMHP got to enjoy this interest free loan, essentially this is what it is. I was sceptical nonetheless. If you think(my guess) about it majority sh has about nearly 80% ownership(now has dropped to maybe 71% with the dilution) and with the low interest rate environment, majority sh loss is minimal and being generous to minority. Will this "loan" be recall. Yes and the day will come when the majority sh drops to say 51% and interest rates starts to climb. until then continue to enjoy this interest free loan.

So if you treat this hk345m as a long term loan(non current liabilities instead), and rework the sums, your current liabilities/current assets will be about 1. The net gearing(loan/equity) would be about 41%, still very comfortable to gear up for infrastructure assets that is generating lots of FCF. Also interest cover is very high.

so overall, no concern.

[Jack31]

Don't play play with the power of minority sh
-Nick
-GG
-cityfarmer
-btws548
-gzbkel
-Damien
-tiggerbee
-skyn
-drizzt
-jacmar
-valueseeker
-valuebuddies
-shouyanz
-marandaz
-greenrookies
-D.L
-jack31

Can form SSH? Lol..
Maybe 1 day if got any hanky panky(touch wood), can combine up.
Very serious VBs here, don't play play..

[Drizzt]

i still cannot get my head round how come the minority dividends jack up from the usual 220mil++ to 400 mil

[greengiraffe]

CMP, DBS Vickers maintain BUY with S$1.42 target price:

Heavy traffic drives 3Q profits
 Net profit in 3Q14 rose 45% y-o-y to HK$210.9m due
to both firm core earnings growth and one-off items
 Good organic earnings growth for all roads; three
out of four roads enjoying toll revenue growth
 Maiden positive contribution of HK$2.8m from
newly acquired Jiurui Expressway
 Maintain BUY with S$1.42 target price (DCF)
Highlights
Overall toll revenue grew 6.3% y-o-y in the quarter to
HK$637m (including associate toll roads)
 This was led by 13.8% y-o-y growth at Guihuang Highway,
7.9% y-o-y growth at Guiliu Expressway, 7.2% y-o-y
growth at Yongtaiwen Expressway, offset by a 4.6% y-o-y
decline at Beilun Port Expressway. Meanwhile, earnings
growth was positive for all four roads at 17.3% y-o-y for
Yongtaiwen Expressway, 9.6% for Guiliu Expressway, 8.1%
for Beilun Port Expressway and 2.5% for Guihuang
Highway.
One-off items also provided a boost
 These include negative goodwill of HK$22.7m arising from
the acquisition of Jiurui Expressway, higher forex gains and
recognition of deferred income and effective interest
income on compensation receivable from the relocation of
certain toll stations along Guihuang Highway.
Positive contribution from newly acquired Jiurui Expressway
portends well for the future.
 By restructuring Jiurui Expressway’s loans, this newly
acquired expressway has started contributing immediately
to the Group’s bottom line and is well-poised to see fastpaced
growth as it is only in its fourth year of operations.
Outlook
 Earnings to continue growing. The acquisition of Jiurui
E’way will help expand the Group’s business, lengthen the
average remaining concession of the road portfolio and
improve its future earnings prospects. This acquisition,
along with organic growth, should help to continue driving
the Group’s earnings.
 Potential for debt-funded acquisitions. With the
outstanding convertible bonds well in the money, we expect
the remaining convertible bonds to be fully converted by
end-2015, which will lower the Group’s net gearing to just
0.18x. This gives the Group debt-headroom for acquisition
DBS Group Research . Equity 7 Nov 2014
Singapore Company Focus
China Merchants Hldgs (Pacific)
Bloomberg: CMH SP | Reuters: CAEP.SI Refer to important disclosures at the end of this report
Page 2
Company Focus
China Merchants Hldgs (Pacific)
deals of between RMB2.5bn and RMB4bn (which would
take FY15 net gearing from c.0.5x to 0.7x), compared to an
enterprise value of c.RMB2.8bn for the Jiurui Expressway
deal.
Valuation
TP of S$1.42 is based on DCF. CMHP’s core earnings has
climbed over 60% in the last two years, versus a less than
50% increase in share price and hence, its valuation
remains attractive at less than 10x FY15 PE (diluted for
convertible bonds), less than 1x P/B and currently offering a
7.9% dividend yield.
Risks
Exposed to the growth of the Chinese economy
 CMHP's core earnings are entirely derived from its toll road
operations in China, which leaves it vulnerable to China's
country risks. As the Group's functional currency is the
RMB, its EPS in S$ terms is subject to any SGD-RMB
volatility.
Regulatory changes could affect earnings
 Any downward revision in the tariff rate would negatively
impact the Group's bottom line.
Target Price & Ratings History
Source: DBS Bank

[Nick]

Total current liabilities > total current assets not a concern?

Not a concern at all. if you look at the current liabilities you will see a line item(vi) of hk345m div payable to majority sh. Many sh ask how come the majority sh didn't ask for this n give CMHP interest free loan. Too good to be true right? I asked the CEO many agms ago and he said that majority sh has a lot of cash and don't need the money. Meantime CMHP got to enjoy this interest free loan, essentially this is what it is. I was sceptical nonetheless. If you think(my guess) about it majority sh has about nearly 80% ownership(now has dropped to maybe 71% with the dilution) and with the low interest rate environment, majority sh loss is minimal and being generous to minority. Will this "loan" be recall. Yes and the day will come when the majority sh drops to say 51% and interest rates starts to climb. until then continue to enjoy this interest free loan.

So if you treat this hk345m as a long term loan(non current liabilities instead), and rework the sums, your current liabilities/current assets will be about 1. The net gearing(loan/equity) would be about 41%, still very comfortable to gear up for infrastructure assets that is generating lots of FCF. Also interest cover is very high.

so overall, no concern.

To be fair, they have been paying it back.

[valuebuddies]

Don't play play with the power of minority sh
-Nick
-GG
-cityfarmer
-btws548
-gzbkel
-Damien
-tiggerbee
-skyn
-drizzt
-jacmar
-valueseeker
-valuebuddies
-shouyanz
-marandaz
-greenrookies
-D.L
-jack31

Can form SSH? Lol..
Maybe 1 day if got any hanky panky(touch wood), can combine up.
Very serious VBs here, don't play play..

Thought GG is top 10 MAJORITY?