Global Value Investing

[throwerw]

http://www.hkexnews.hk/listedco/listconews/sehk/2014/0819/LTN20140819855.pdf



No further clues about financing for the Sofitel NY. No properties were sold in Macau in the half, no significant changes to the balance sheet as of June 30.



The operating results were very good. TTM FCF rose to 275m from 253m at the end of 2013. Cash and deposits stood at 1,986m, after 51m was paid out in dividends during the half. Interim dividend unchanged at 3 cents.



Macau rental income increased 19% yoy and the investment properties were marked up to 700m from 600m. Macau Rental EBIT increased from 16m to 23m.



“During the first half of 2014, rental revenue of the Group’s properties continues to increase in line

with the robust economic growth driven by the strong visitors arrivals and construction activities

relating to the gaming and hotel developments. This trend is expected to continue for the next few

years.



Against this background, and with an objective to enhance shareholders’ value, the Group has decided

to continue its policy of adopting a flexible approach towards pricing and marketing of its properties

held for sale in Macau. Specifically, the Group will continue to be vigilant in monitoring market

developments and price movements in the luxurious residential sector with a view towards sale at

price points that will optimize profits for the Group. In the meantime, the Group will continue to take

advantage of the strength of the leasing market in Macau residential properties and lease out as many

of the vacant units as possible to ensure that there is a good return from these properties.”



DSEC recently released Macau average property transaction values in Q2 2014.

Taipa Overall Residential: HK$105,000/sqm (we marked Lot W at 82,000)

Second Hand Ocean Gardens Residential (older flats): HK$87,000/sqm (we marked at 59,000)

Office Overall: HK$119,000/sqm (we marked at 55,000 and 74,500)

Industrial Overall: HK$58,000/sqm (we marked at HK$33,000)



A number of major infrastructure projects, including a bridge connecting Macau to the HK airport, are continuing on schedule for early 2016.



Vietnam bounced back nicely, with EBITDA from the Sheraton up 25% yoy to 134m. Both hotels reported record first half profits, despite the anti-China riots in May.



W San Francisco occupancy held steady at 87%, ADR rose 11%, EBITDA rose 17% yoy to 56m. Based on recent transactions, the property's value could be roughly HK$2 billion.



Japan occupancy rose to 89% from 86%, ADR rose 7.8%, EBITDA rose 28% yoy to 8.5m, net income doubled.



China was the one weak spot, although revenue rose slightly, EBITDA dropped from 8m to 5m.



My estimate of NAV per share has increased to at least HK$25+, so despite the significant share price appreciation this year, discount to NAV has not changed much.