Global Value Investing

[throwerw]

HK:0703 Future Bright Limited

Bright future ahead for this stock?

2010 Annual Report
http://corpsv.etnet.com.hk/webservice/jsp/ETNET/CorpAn/eng/detail.jsp?VERSION=ENG&DOCCD=63879

EPS up to .09 from .04 yoy

Divested amusement park assets in 2010
Runs 19 restaurants and 10 "multi-cuisine food court counters" in Macau, Guangzhou, Zhuhai
Food and beverage business revenue up 63% yoy
Dividend payout 17% of net income, 1.5 cents per share, current yield 3%

"The policy of upholding steady pay out of normal dividend each year remains intact."

PE 5.85
ROE 23%
Net Margins 16%

CEO went to University of Toronto

Audited by BDO (not that this means anything)

This should change the balance sheet significantly, however... "To diversify our income base, our management has entered into property investment business in November 2010 where our Group entered into an agreement , of which was subsequently completed in January 2011, to acquire at the total cash consideration of HK$262.8 million"

The property is generating rental income HK$14 million. "The total assets and total liabilities of the Group as at 31 December 2010 were approximately HK$429.2 million and HK$208.3 million respectively, based on the audited consolidated financial statements of the Group for the year ended 31 December 2010. Assuming the acquisition had been completed on 31 December 2010, the unaudited pro forma total assets and total liabilities of the Group as enlarged by the acquisition of this commercial building as at 31 December 2010 would be increased by some 43.7% to approximately HK$616.8 million and by some 89.5% to HK$394.7 million respectively, from those set out in the audited consolidated financial statements of the Group as at 31 December 2010. A better utilization of spaces of this commercial building to generate more annual rental income is feasible. If this commercial building is not leased out, our Group could consider lease out parts of it with the remaining to be used as its new restaurants. This acquisition is a good investment so as to broaden our Group’s income sources and to enhance its long-term potential growth"

The company expects to add 5 restaurants and 1 food court counter in 2011. 20% increase in restaurants and an additional HK$14 million in net income could mean HK$62 million in net income for 2011, or 13 cents per share.

As I was writing this, the property purchase made me like the stock a lot less. 4 times 2011 earnings is still pretty cheap for a hong kong stock with growing earnings and a dividend.