Shunho Holding(00253) and Shunho Property(00219)

[Scg8866t]

Crossholding hotelier cum office coy SHUNHO HOLDING(00253) and SHUNHO PROPERTY(00219). Headed by son in law of Henderson Land.

Deep valuation metric for 00253 especially.

1.3X price to fcf
73% fcf yield
0.137x book(hotels all at cost less depreciation)
Consistently positive fcf since inception
Quality earnings with 1.613x trailing pe at current price 2.10

They can potentially churn out cash equivalent to market cap in 1.3 years! 

The crossholding and lack of div is an issue but its subsidary the listed Shunho Property is already starting to payout div and increasing yearly.

Anyone has any views on this?

Thanks!

[opmi]

look into this group of companies before. I thought there is 1 more level - Magnificent Estates( or something like that)

[Scg8866t]

look into this group of companies before. I thought there is 1 more level - Magnificent Estates( or something like that)

Yes as attached. But Magnificent Hotels prints shares over time and has no exposure to the two office buildings and the recent Hotel acquisition(Grand view).

So I feel its parent coys are better choices.

[opmi]

I never invested in Shun Ho group of shares.

I think the middle one 219 HK is the best since all distributions (cash or in-specie) will have to pass through it.

the best for minority will be when the boss want to flatten the structure via share swaps and in-specie distributions.
it is been done before for the Lai Sun group, I think. I never really read it up.

Other than that, it is better to be paid (via div or NAV growth) while waiting for the unlocking of assets. Which may come one day when the boss croaks.

[Scg8866t]

I never invested in Shun Ho group of shares.

I think the middle one 219 HK is the best since all distributions (cash or in-specie) will have to pass through it.

the best for minority will be when the boss want to flatten the structure via share swaps and in-specie distributions.
it is been done before for the Lai Sun group, I think. I never really read it up.

Other than that, it is better to be paid (via div or NAV growth) while waiting for the unlocking of assets. Which may come one day when the boss croaks.

I feel it depends. Shunho holding u get deeper valuation and 4 years low pricing. Fcf can cover market cap in 1.3 years. Any div shunho prop pays, the holding coy will receive too. The founder owns 51% of the holding coy only. Could make a case that u can be aligned with him this way.

For Shunho Prop, you get a div aristocratic yield while sacrificing cheap valuation(more than double the holding).

To get a sense of how cheap their hotels are: In 2014 MAG completed the sale of the Best Western Macau for HK$900mil which generated HK$40mil EBITDA in 2013. The disposal resulted in a profit of aprox HK$620mil in the 1st half of 2014

Their HK hotels are also surprisingly efficient avg close to 100% occupancy p.a

[soros]

I think there is more chance of a substantail price gain happening in Lai Sun.( 00191.HK )

[Scg8866t]

I think there is more chance of a substantail price gain happening  in Lai Sun.( 00191.HK )

Lai sun I rem taking a glance at its numbers before. No fcf to talk abt for many years and they have a habit of printing and increasing their share float overtime. Also their substantial and increasing debt load of 0.63x net debt to equity. All these mainly due to their inability to be in positive fcf?(guessing) Not familar with with the nuances though.

In terms of quality of earnings, shunho is one of the few out there that is unmatched. Their cash churning ability seems pretty insane. Imagine 00253 churning out fcf of almost its own market cap in a year.

Own view

[soros]

Lai Sun ( 0191.HK ) started as a garment company and branched out with subsidiary company , Lai Sun Development ( 0488.HK ) which is a substantial property development company.

Due to near collapse 20 years ago , the companies did not pay any dividend for about 17 years but recently the companies have resumed paying a tiny dividend.

About 3 years ago, the Lam family held 50% shares in Lai Sun ( 191.HK ) but it seems some family members have been buying the shares and taken the total family holding to 75%.

The share price is around HK $10 ( for 191 ) and HK $12 ( for 488) but the NAV of both companies is over HK $50 .

The company is headed by Peter Lam who has been appointed to head the HK Trade Development Council.( HK Government Unit ) in September . So I am expecting a higher dividend otherwise there is no point raising the family stake from 50% to 75%

As for Shun Ho Holdings ( 253 ) it has not paid any dividend during last 5 years. NAV is $12 .76 and shares are around $2.06
ShunHo Property ( 219) shares are priced around $2.80 and pays 6.9 cents dividend . NAV is $12.30.

The problem for prospective investors is Willian Cheng, CEO has not given any indication he wants to deliver the profits to its shareholders.

[Scg8866t]

Lai Sun ( 0191.HK ) started as  a garment company and branched out with subsidiary company ,   Lai Sun Development ( 0488.HK ) which is a substantial property development company.

Due to near collapse 20 years ago , the companies  did  not pay  any  dividend for about 17 years but  recently  the companies have  resumed  paying a tiny dividend.

About 3 years ago, the Lam family held  50% shares in Lai Sun ( 191.HK  ) but it seems some  family members have been buying the shares and taken the total family holding to 75%.

The share price is around HK $10  ( for 191 ) and HK $12 ( for 488) but the NAV of both companies is over HK $50 .

The company is headed by Peter Lam who has been appointed to head the HK Trade Development Council.( HK Government Unit ) in September .  So I am expecting a higher  dividend otherwise there is no point raising the family stake from 50% to 75%

As for Shun Ho Holdings ( 253 ) it has not paid any dividend during last 5 years. NAV is $12 .76  and shares are around $2.06
ShunHo Property ( 219) shares are priced around $2.80  and pays  6.9 cents dividend . NAV is $12.30.

The problem for prospective   investors is Willian Cheng, CEO  has not given any indication he wants  to deliver the profits to its shareholders.

As mentioned, Shunho rnav is much higher as the bulk of their assets are long lease hotels valued at historical cost less depreciation in books. As mentioned previously, shunho’s price to fcf since inception is ard 1.3-2x annualised, ie the quality of their earnings are great. Predominantly cash earnings due to low capex and high net op cf. Its still harvesting period for them, unlike Lai Sun with bulk of their earnings based on non cash and continuously hit by neg fcf yearly.

Shunho holding float has also been decreasing overtime, while Lai sun due to its lack of fcf(neg fcf) has been doing rights issue and script to dilute shareholder value.

Own view

This is a thread for Shunho group of coys, maybe can stick to only that. Can create another thread if you wish to expand on Lai sun. Thanks.

[opmi]

I think it is good to learn about Lai Sun group and other HK multi-stack listed company. The pattern that they will unlock the value will more or less similar.