I thought they were fine.
The W San Francisco was the bright spot; the hotel is now generating HK$50m annual FCF to the company on a total investment of only HK$340m. Annual EBITDA has roughly doubled to HK$100m since the purchase, and I think the market value of their investment has roughly tripled.
No apartments sold in Macau, I think they are waiting until the HK-Macau bridge is complete in 2015 to start selling again. Macau is generating about HK$30m annual FCF from rental income, and this number should grow as rents are increasing at double digit annual rates.
Vietnam revenues slightly down, but still generating a lot of free cash. LTM FCF attributable to the company is about HK$150m, about a 30% yield on their total investment.
I estimate the company has about HK$1.45B net cash at the parent level (1.895B cash, 830m total liabilities, but 330m debt is backed by the W). The company is generating at least HK$280m FCF without any Macau flat sales. This includes HK$30m of interest income at less than 2% rates, so as interest rates rise this should improve substantially. You have good growth coming from the US and Macau, with the potential for further asset sales or good acquisitions. Liquidation value is roughly 5x the current share price.
There is simply no downside at this price, and about 25% upside to net cash one year out. The stock is holding up well considering the rout that's going on in emerging markets right now. This kind of risk/reward profile is tough to find.
AI
