Metro Holdings

[cfa]

Most if not all property companies are trading at discount to NAV , METRO is not exceptional. JO's salary is another reason why many choose not to invest into this company.

[opmi]

Most if not all property companies are trading at discount to NAV , METRO is not exceptional. JO's salary is another reason why many choose not to invest into this company.

how old is JO? maybe catalyst coming soon....

[GFG]

Certainly Metro's property portfolio is undervalued is without a doubt. Question is, much like many other undervalued property counters trading at discounts to NAV, is when the management will do something to realize the value. In the meantime, excluding the accounting gains, the fact that Metro is actually making operating losses will continue to be a drag and concern.

I'm actually quite puzzled why they took up the space at Centrepoint...the retail landscape is so competitive as it is...amongst Tangs, Isetan, Taka, Robinsons and Metro...I actually like Metro the least..but that's just my personal opinion.

I was at the AGM and don't recall Gerald Ong making such promises... In any case I don't think anyone can make such a guaranty except say they will try their best to secure a tenant. The Frontier building is doing worse than the rest but like I said, to put things in perspective, it is FH, no debt so downside risks really is minimal
Also, metro doesn't have any "operating losses" on an annual basis. On a quarterly basis, sure that's possible but metros earnings are supposed to be lumpy anyway. If your strategy is to build, then rent out and eventually divest when you perceive the price is good, of course earnings will be lumpy.
In a single year analysis, we have to forget about these one off gains from divestments. But if there's a repeated history of divestments and acquisitions, this means the "one off" gains are not extraordinary, and it should be taken into account in a long term multi yr analysis of the company.

JO salary is IMO, a stumbling block. It is no doubt one of the highest amongst all CEOs, esp if there are profitable divestments in that year.
But I don't think there's a need for any "catalyst". Even in the abscence of any catalyst, the share price will eventually rise to match NAV if there's constant earnings, FCF is +ve etc.
The main thing weighing on the share price now is more likely to be the perceived lackluster china property market, not JO salary.

[Stocker]

Not easy to get replacement tenants for years ? Metro must pray other tenants stay put , otherwise in no time this building will be a ghost building.

[GFG]

Not easy to get replacement tenants for years ? Metro must pray other tenants stay put , otherwise in no time this building will be a ghost building.

Years?! Where do you get your info from man...
Pls read the financial statements again:

AR2014, page 25:
Occupancy of Frontier is 100% as of 31 march 2014, for the 1st time since it was acquired.
FY15Q2:
Profit from Frontier has dropped due to:
1) devaluation of yen
2) lower rental rates
BUT occupancy rate is still 100%.

[Stocker]

Refer AR report of 2012 !

[GFG]

Refer AR report of 2012 !

Don't mean to be rude... But your comments are way off the mark.
Here are the facts:
Frontier was acquired and first appeared in AR 2011. Occupant rates are:
AR 2011 73.2%
AR 2012 73.2%
AR 2013 85.3%
AR 2014 100%
FY2015Q2 (latest) 100%

So I dunno what you mean by Gerald Ong making promises and can't get tenants "for so many years" and it's going to be a ghost building.
Yes, profitability has decreased as I mentioned in previous points. But what you brought up regarding occupancy rates is outright wrong.

[greengiraffe]

Once upon a year... Metro used to be my core holding...

I guess I had enough with Metro...

They had no drive to enhance shareholders' wealth and they will do what they can to hunt for new investments and justify their actions. As a result, many disgrunted investors have steered clear of Metro notwithstanding the "discount":

i) they have mistimed their entry into Japan; of course one can say freehold and long term... time heals all wound but in the meantime the suffering is unbearable;
ii) they got into Top Spring at a high price and averaged down when price dropped too steeply; then they got into a JV with Top Spring but then again who can we argue that Metro is wrong since the JV is doing well
iii) of course their retail has never made much $ but yet they keep maintaining their presence and even their Indonesian exposure also yet to contribute meaningfully... feed key relative... JO's sister?
iv) Metro has always been good at tapping on connections... nothing wrong but why can't they have their own views especially when they are putting in good $... of course the argument is to mitigate risks via strategic partnership with good experience like NanFung linked funds, Top Spring, Wing Tai etc... if this is the case why can't we buy directly into their strategic partners?
v) if they genuinely want to enhance shareholders' wealth, they would have declared good one-off special dividends when they cashed out of several of their China properties at the then peak... they were easily sitting on $0.30 - $0.40/ share cash but they choose to reinvest for the future... they will be right but MI is stuffed and starved...
vi) lastly, Metro is owned by the Ong family, orginally made $ from Indonesia or Indonesia linked. I think the demised Ong has an extended family though only JO is the key driver holding and feeding the entire family. In such instances, sharing wealth is a bad thing since once $ is distributed, then it will be a case of tree down, monkeys scattered...
vii) look at Metro's major assets - still largely in high risks China where leases are typically 50 yrs and less... some of the valuations could be questionable once lease approaches the end and hence there are good reasons why the "discount"

I m merely a disgrunted ex major holder in Metro even though I made $ from it...I have seen too many big management teams... for someone like JO that never answer any questions at Metro's AGM... I certainly don't not feel comfortable... If you are a controlling holders, why pass up opportunities to make it your stage... no confidence in your own ability or don't want to be accountable to your own words...

Please feel free to convince me... I m done for in Metro...

Odd Lots Vested
Ex Core Holdings
GG

[GFG]

Once upon a year... Metro used to be my core holding...

I guess I had enough with Metro...

They had no drive to enhance shareholders' wealth and they will do what they can to hunt for new investments and justify their actions. As a result, many disgrunted investors have steered clear of Metro notwithstanding the "discount":

i) they have mistimed their entry into Japan; of course one can say freehold and long term... time heals all wound but in the meantime the suffering is unbearable;
ii) they got into Top Spring at a high price and averaged down when price dropped too steeply; then they got into a JV with Top Spring but then again who can we argue that Metro is wrong since the JV is doing well
iii) of course their retail has never made much $ but yet they keep maintaining their presence and even their Indonesian exposure also yet to contribute meaningfully... feed key relative... JO's sister?
iv) Metro has always been good at tapping on connections... nothing wrong but why can't they have their own views especially when they are putting in good $... of course the argument is to mitigate risks via strategic partnership with good experience like NanFung linked funds, Top Spring, Wing Tai etc... if this is the case why can't we buy directly into their strategic partners?
v) if they genuinely want to enhance shareholders' wealth, they would have declared good one-off special dividends when they cashed out of several of their China properties at the then peak... they were easily sitting on $0.30 - $0.40/ share cash but they choose to reinvest for the future... they will be right but MI is stuffed and starved...
vi) lastly, Metro is owned by the Ong family, orginally made $ from Indonesia or Indonesia linked. I think the demised Ong has an extended family though only JO is the key driver holding and feeding the entire family. In such instances, sharing wealth is a bad thing since once $ is distributed, then it will be a case of tree down, monkeys scattered...
vii) look at Metro's major assets - still largely in high risks China where leases are typically 50 yrs and less... some of the valuations could be questionable once lease approaches the end and hence there are good reasons why the "discount"

I m merely a disgrunted ex major holder in Metro even though I made $ from it...I have seen too many big management teams... for someone like JO that never answer any questions at Metro's AGM... I certainly don't not feel comfortable... If you are a controlling holders, why pass up opportunities to make it your stage... no confidence in your own ability or don't want to be accountable to your own words...

Please feel free to convince me... I m done for in Metro...

Odd Lots Vested
Ex Core Holdings
GG

Hi GG
won't comment on most of your points as they are mostly about operations and it's really hard to comment without being in that situation. Eg. Mistimed entry into japan, hard to say if it's really mistimed and even if it is, business owners can't predict policy changes like currency etc. So you may be right, but with hindsight, everyone is always right.
Just 2 comments:
1) I disagree that the retail portion should be closed.
Yes, it is a competitive business, and yes margins are razor thin. Yes, it is also capital intensive. But metro already has the operational setup, and it is and always has been profitable. It contribute only ard 10% of earnings, but it is STILL profitable. Why close it? Even WB resisted closing the textile portion of Berkshire for many years cos it is exactly like metros situation. Barely profitable but not losing $$$.
In his own words, he said he won't shut down even a barely profitable unit just to improve on his returns on invested capitals. Only when Berkshire has grown to a mammoth size and he can reallocate capital to better places, did he finally close the textile. Doesn't make sense to not earn $$$ when it's there right?
2) sounds like a major gripe is the lack of returns to SHs after divestments. Here, I can understand the argument. Most SH wants more dividends, special dividends after divestments. The proper way to see it is: is the long term ROE or ROIC higher than what you can get if u get the money and invest it yourself?
Again this is WBs teaching and it makes absolute sense.
Management should always reinvest the earnings if they can get high enough returns. If they have too much $$$ from divestments WITHOUT a way to reinvest it, they should return money to shareholders in the form of dividends or share buybacks
I don't have the exact data now, but I rem some site did a calculation and metro long term (10yr) median ROE is around 9-10%
Admittedly, that's not very high. Reasonable but not v high.
So if u think your personal track record can beat this ROE, then it definitely makes sense to exit and reinvest yourself.

[GFG]

Once upon a year... Metro used to be my core holding...

I guess I had enough with Metro...

They had no drive to enhance shareholders' wealth and they will do what they can to hunt for new investments and justify their actions. As a result, many disgrunted investors have steered clear of Metro notwithstanding the "discount":

i) they have mistimed their entry into Japan; of course one can say freehold and long term... time heals all wound but in the meantime the suffering is unbearable;
ii) they got into Top Spring at a high price and averaged down when price dropped too steeply; then they got into a JV with Top Spring but then again who can we argue that Metro is wrong since the JV is doing well
iii) of course their retail has never made much $ but yet they keep maintaining their presence and even their Indonesian exposure also yet to contribute meaningfully... feed key relative... JO's sister?
iv) Metro has always been good at tapping on connections... nothing wrong but why can't they have their own views especially when they are putting in good $... of course the argument is to mitigate risks via strategic partnership with good experience like NanFung linked funds, Top Spring, Wing Tai etc... if this is the case why can't we buy directly into their strategic partners?
v) if they genuinely want to enhance shareholders' wealth, they would have declared good one-off special dividends when they cashed out of several of their China properties at the then peak... they were easily sitting on $0.30 - $0.40/ share cash but they choose to reinvest for the future... they will be right but MI is stuffed and starved...
vi) lastly, Metro is owned by the Ong family, orginally made $ from Indonesia or Indonesia linked. I think the demised Ong has an extended family though only JO is the key driver holding and feeding the entire family. In such instances, sharing wealth is a bad thing since once $ is distributed, then it will be a case of tree down, monkeys scattered...
vii) look at Metro's major assets - still largely in high risks China where leases are typically 50 yrs and less... some of the valuations could be questionable once lease approaches the end and hence there are good reasons why the "discount"

I m merely a disgrunted ex major holder in Metro even though I made $ from it...I have seen too many big management teams... for someone like JO that never answer any questions at Metro's AGM... I certainly don't not feel comfortable... If you are a controlling holders, why pass up opportunities to make it your stage... no confidence in your own ability or don't want to be accountable to your own words...

Please feel free to convince me... I m done for in Metro...

Odd Lots Vested
Ex Core Holdings
GG

Oh and I will add that I totally agree with the comments on JO at AGMs
I have been to a couple now and he has NEVER made any comments or answered any qns. The guy who is impressive is Winston Choo, the ex chief defence
He's the guy answering and mingling together with SHs etc.
perhaps he hates communicating with SHs because he knows many ppl are looking at his salary n there is unhappiness amongst SHs there.