Mandarin Oriental

[yawnyawn]

I am quite surprised that the management rejected the 5 bids. I estimate that Excelsior HK roughly generates USD12M in net profits. HK$27B (US$3.4B), if that is the highest bidder, is 280x of the annual net profit!

Moreover, Mandarin Oriental is not in the business of owning commercial properties. Going forward, I can't see the rationale of developing the property into a commercial property on its own.

[Hippocrates]

I am quite surprised that the management rejected the 5 bids. I estimate that Excelsior HK roughly generates USD12M in net profits. HK$27B (US$3.4B), if that is the highest bidder, is 280x of the annual net profit!

Moreover, Mandarin Oriental is not in the business of owning commercial properties. Going forward, I can't see the rationale of developing the property into a commercial property on its own.

Yeah, it is rather weird that they rejected such a bid that surpasses the market value of the group! Since Mandarin Oriental is largely owned by Jardines, perhaps they can sell Excelsior HK to their own Hongkong Land for developing... but it won’t be easy to find a price point at which shareholders from both groups will be pleased lol.

[crabcrab]

MOIL ($2.01) - On hindsight, the failed bids had provided an insight for the management and shareholders and potential investors an indicative figure of the actual intrinsic value of this company. Even without the Excelsior sale, it is roughly estimated that one property (Excelsior HK) has already exceeded the whole market capitalisation of this company and excluding all other 18 properties held. At current px level, MOIL may have been mispriced or grossly undervalued. Perhaps, the massive drop yesterday may present an excellent opportunity to invest in a just discovered gem. Alike other privatised company (such as CK TANG), the preferred option of the controlling shareholders is usually to privatise company with gem assets and not to sell the prized property and to distribute gains to shareholders. (Imho)

[crabcrab]

MOIL ($2.29) - Continue its surge for 5 consecutive day from the massive plunge since the announcement of the rejection of bids. Perhaps at current price level, this company is still far from the real intrinsic value? It is of anybody guess now on how much more upside it will go. Good luck!

[cyclone]

Half-Yearly Result for the Six Months Ended 30th June 2019

Highlights :
* Underlying earnings before interest, tax, depreciation and amortisation for the first six months of 2019 were US$69 million, down from US$84 million in the first half of 2018
* Underlying profit for the period was US$11 million, compared with US$22 million in the equivalent period in 2018
* Underlying profit impacted by closure of The Excelsior and renovation in Bangkok
* At 30th June 2019, the Group’s net debt was US$336 million and gearing as a percentage of adjusted shareholders' funds was 6%
* An interim dividend of US¢1.50 per share has been declared, unchanged from last year
* Mandarin Oriental Hyde Park, London fully reopened
* Four new hotels opened
* Two new management contracts signed

More details in https://links.sgx.com/FileOpen/MOIL.ashx...eID=572825

[¯|_(ツ)_/¯]

9 Apr 2020 MO Interim Management Statement on impact of C19 (click to read sgx announcement)
Decision to withdraw Final dividend of US$0.015

5 May 2020 AGM result (click to read announcement)
All resolution pass except Resolution #2 which has been withdrawn by the directors of the company.

Stay safe and stay healthy everyone.

[weijian]

Mandarin Oriental was specially mentioned by the 3rd avenue international real estate folks. For item (iii), the Jardines are well know asset gatherers and so I thought the odds are stacked against it happening. But if the parent company needs to fund its other subsidiaries' expansion of higher priority, then it is possible that Mandarin Oriental will pay upwards.

THIRD AVENUE INTERNATIONAL REAL ESTATE VALUE FUND AS OF SEPTEMBER 30, 2022

the Fund made a ‘special situation’ investment in Mandarin, which owns a portfolio of luxury hotels across 15 properties majority exposed to Asia. In addition, Mandarin manages 21 properties together with a pipeline of 25 properties under various stages of construction. The company is controlled by Jardine Matheson, one of Asia’s oldest holding companies that has five main divisions including Mandarin. Fund management considers Mandarin a unique value proposition with three clear share price catalysts, including:

(i) Unlike many western economies, parts of Asia are yet to fully reopen to travel following COVID. With two thirds of Mandarin’s luxury hotel portfolio in Asia, we expect any reopening to be accompanied by significant pent up demand, driving room rates, occupancy, and thus earnings, all of which should act as a powerful catalyst for Mandarin shares;

(ii) Mandarin Oriental is now a highly desirable luxury brand, enabling Mandarin to sign numerous hotel management agreements with third parties that will more than double the size of managed hotels. Often based on hotel revenue, generating these recurring fees requires negligible capital investment and is a way of monetizing Mandarin’s brand through increased cash flows; and

(iii) Perhaps the most compelling, Mandarin is in the process of redeveloping a former hotel site into a mixed-use property in Causeway Bay on Hong Kong Island. Given the very high land values in Hong Kong, the current value of this project exceeds the entire equity market capitalization of Mandarin by our estimates. The development project is expected to be completed in 2025, and Mandarin has stated that it is ‘not a strategic holder’ and is likely to sell the asset. This could result in a meaningful positive resource conversion event for shareholders, such as a very large special dividend.

https://thirdave.com/wp-content/uploads/...Letter.pdf

[weijian]

MOI's 3Q22 update states that its Asian hotels are still lagging behind the other regions (for context, the Asian hotels used to account for ~50% of revenue before covid-19 but are now currently punching below their weight at only ~25% of revenue contribution). With China finally re-opening, will it complete the jigsaw puzzle for MOI's luxury hospitality business to base its recovery from?

China’s open borders mark Covid Zero end, spark rush home

But the influx of travellers heading into the country is unlikely to be matched by a surge in demand for overseas trips. The flow of Chinese tourists, previously a US$280 billion spending force in global holiday hotspots from Paris to Tokyo, will take months if not years to recover to its pre-pandemic level.

A raft of countries have implemented testing requirements on travellers from China after infections surged, and airlines have been reluctant to immediately make major changes to their flight schedules meaning capacity remains tight and prices high.

“The willingness to travel has started to strongly rebound among Chinese,” said Chen Xin, head of China leisure and transport research at UBS Securities. “But it still takes time to be reflected in the outbound travel routes.”

https://www.businesstimes.com.sg/interna...-rush-home

[weijian]

The luxury hospitality business is pretty CAPEX intensive. A complete make-over needs to be done periodically to modernize the hardware to catch up to the new competition. MO Singapore will re-open in Sept, since there is no way, as part of the few Marina Bay/Fullerton area hotels, that it will miss F1 Spore.

Mandarin Oriental, Singapore closes for renovation

The hotel’s multi-million-dollar transformation is set to take place across all fronts, including a complete redesign and refitting of the hotel’s interiors, from the grand lobby and the rooms to the award-winning food and beverage venues.
https://www.tradearabia.com/news/TTN_407339.html


Review: Mandarin Oriental Hotel Singapore Staycation

Service at the Mandarin Oriental Singapore is, in a word, impeccable.

The front desk addressed her as “Ms Kwek”. “Mrs Wong,” she corrected them (what a keeper). The next morning at breakfast, the staff were all calling her Mrs Wong. At other places, that little interaction would have been quickly forgotten; here it was noted, disseminated and institutionalised overnight. It’s the kind of attention to detail you’d expect at a luxury hotel.
https://milelion.com/2021/01/29/review-m...taycation/

[Choon]

Mandarin Oriental was specially mentioned by the 3rd avenue international real estate folks. For item (iii), the Jardines are well know asset gatherers and so I thought the odds are stacked against it happening. But if the parent company needs to fund its other subsidiaries' expansion of higher priority, then it is possible that Mandarin Oriental will pay upwards.

THIRD AVENUE INTERNATIONAL REAL ESTATE VALUE FUND AS OF SEPTEMBER 30, 2022

the Fund made a ‘special situation’ investment in Mandarin, which owns a portfolio of luxury hotels across 15 properties majority exposed to Asia. In addition, Mandarin manages 21 properties together with a pipeline of 25 properties under various stages of construction. The company is controlled by Jardine Matheson, one of Asia’s oldest holding companies that has five main divisions including Mandarin. Fund management considers Mandarin a unique value proposition with three clear share price catalysts, including:

(i) Unlike many western economies, parts of Asia are yet to fully reopen to travel following COVID. With two thirds of Mandarin’s luxury hotel portfolio in Asia, we expect any reopening to be accompanied by significant pent up demand, driving room rates, occupancy, and thus earnings, all of which should act as a powerful catalyst for Mandarin shares;

(ii) Mandarin Oriental is now a highly desirable luxury brand, enabling Mandarin to sign numerous hotel management agreements with third parties that will more than double the size of managed hotels. Often based on hotel revenue, generating these recurring fees requires negligible capital investment and is a way of monetizing Mandarin’s brand through increased cash flows; and

(iii) Perhaps the most compelling, Mandarin is in the process of redeveloping a former hotel site into a mixed-use property in Causeway Bay on Hong Kong Island. Given the very high land values in Hong Kong, the current value of this project exceeds the entire equity market capitalization of Mandarin by our estimates. The development project is expected to be completed in 2025, and Mandarin has stated that it is ‘not a strategic holder’ and is likely to sell the asset. This could result in a meaningful positive resource conversion event for shareholders, such as a very large special dividend.

https://thirdave.com/wp-content/uploads/...Letter.pdf

On point (iii), it seems the new development is largely a office building. A most likely scenario and I cannot imagine any other plausible alternative is that the new development is sold to HongKong Land for HongKong Land to own and manage.

(a) If its going to have good prospects as office building, it makes sense to keep in the the family by selling to HKL;
(b) If its going to have poor prospects as a office building, it would look stupid to have rejected the high bids years ago, thus it can only be deemed to be a office building w good prospects.