Yau Lee Holdings (0406)

[port]

take a look, this could be a hidden gem among the rocks.http://www.yaulee.com

[port]

land/building acquisition in 2009

1. 43-45 Tsun Yip Street,kwun tong,kowloon. GFA, 110k ft2. px, 100m hkd.
initial proposed plan to build hotel with 273 rooms either scrapped or not approved by authority. new plan to convert to office use.
http://www.info.gov.hk/tpb/tc/plan_appli...0_gist.pdf

2. 40 Prinsep Street, Singapore. px,22.9m hkd

3.Jervois Street/Burd Street,Sheung Wan. GFA: 66-99k ft2. px,350m hkd
site of a new Holiday Inn Express branded hotel to be completed in 2012

4.land of 155k m2 at huizhou. px, 50m rmb

5. 18 CHI KIANG STREET, To Kwa Wan, kowloon. px, 121m hkd
conversion premium paid to convert from industrial to residential: 199m hkd

---

6. 10 Gopeng Street,#38-26 Icon. singapore.

7. Rear Portion of 4th Floor, 33 & 33A Pok Fu Lam Road, Sai Ying Pun. Hong Kong

http://www.ktd.gov.hk/eng/overview.html

---

A co. of 500m mkt cap with a 11b order book.

dont think there is a comparable listed construction firm on sgx with such a high order book to mkt cap ratio.

[port]

just out of interest........... a comparison of order book vs mkt cap
.....................order book in m............... mkt cap....... order bk/mkt cap
yau lee..........11000 hkd.....................500 hkd.....22x
tiong seng......1200......................195......6x
csc...............230.......................190......1.2x
ryobi kiso......79.........................130......0.6x
lian beng.......661.......................196.......3.3x
okp...............376.......................179.......2.1x
chip eng seng...333.....................360.......0.9x

[port]

my estimate that holiday inn express SOHO to open in june 2012 full yr revenue is between 41-62m hkd. net profit margin: 50%

estimate average daily room rate:635 hkd
no of rooms: 274
assume 100% occupancy: 63.5m annual revenue
50% occupancy: 32m revenue

[dzwm87]

What's your reason for Yau Lee being a gem?

I took a quick glance at its figures - some concerns:

1. YL has been burning cash for the past 6 years except for FY09. Cash were burned even in its operations, let alone CAPEX. This was quite evident from its cash holdings that was diminishing from the fact that they were also paying out dividends
2. Agree with the impressive order book but at a 0.9% net margin in 1H FY12, this translate to only HK$99m, profit of 20% at its marcap. Comparing this with OKP who has around 19% net margin, OKP order book is translated to a profit of 40% of its marcap. Does YL looks as impressive now? HK construction industry faces very high labour cost. If you read Minister Khaw latest blog, he covers a little on HK construction industry scene.

*not vested*

[port]

http://boc.quotepower.com/web/bochk/stoc...tStock=406

does the above link change yr opinion of YL now?

[dzwm87]

Hi Port,

I have seen the BS before and still have doubts. No doubt, P/B ratio is very low but on a business perspective, negative cash flow, low ROE and narrow margins are huge disincentive to invest in YL.

Will be interested in hearing your thoughts though

[port]

if we take a closer look at fy08, Net Cash Flow from Investing Activities of 1524m is mainly due to sale of hotel at causeway bay just before lehman brothers collapsed in aug/sept 2008. YL made a profit of 700m from that sale. The B/S for fy08 shows that YL is in a net cash position of 791m($1.80 per share) and 815m($1.86 per share) for fy09.

From fy10 onwards, YL ramp up its debt drastically as it was on a buying spree of land/buildings during the depths of recession. i asked myself this Qn:" Did YL squander away the huge gain from the hotel sale or was the proceeds put to good use?" it is highly likely the latter.

From 2009 till now, residential prices in hk surged & YL is sitting on unrealised capital gains on its investment. the new hotel in sheung wan should provide a more stable, recurring revenue & net profit which overall should more than compensate for the miserable net profit margin for its construction & M&E division.

Note i'm not trained in finance & accounting.

[port]

Anyone knows the reason why YL choose to incorporate in bermuda instead of hk?

[port]

YL bought the land at 77-85 jervois street in apr 09 for 350m or 3556/ft2 AV. any idea what's the meaning of AV?

http://www.joneslanglasalle.com/Pages/Ne...emID=17241