China Merchants Holdings Pacific

[Jack31]

Thanks Nick, nice to hear from u as always. Was surprise result was within your expectation. It came out much better than what I expect. 128m profit Q1, 175m Q2. Almost 50m more even with 2 toll free period (mayday and qingming) in Q2.

[Nick]

Thanks Nick, nice to hear from u as always. Was surprise result was within your expectation. It came out much better than what I expect. 128m profit Q1, 175m Q2. Almost 50m more even with 2 toll free period (mayday and qingming) in Q2.

They booked in 31 million forex gain in 2Q 2013 so this would explain the large 'bump' in quarterly profit. I don't think operationally there will be a lot of surprises - generally toll roads are low growth investments so revenue wise, it will be tough to expect heavy growth revenue wise. Exception to this rule seems to be Guiliu Expressway which registers double digit growth annually over a long period of time - pity, it has the shortest remaining concession lifespan.

Our fellow buddy Drizzt has shared his views on the 2Q results here - http://www.investmentmoats.com/money-man...3-results/

[Jack31]

Thanks Nick, nice to hear from u as always. Was surprise result was within your expectation. It came out much better than what I expect. 128m profit Q1, 175m Q2. Almost 50m more even with 2 toll free period (mayday and qingming) in Q2.

They booked in 31 million forex gain in 2Q 2013 so this would explain the large 'bump' in quarterly profit. I don't think operationally there will be a lot of surprises - generally toll roads are low growth investments so revenue wise, it will be tough to expect heavy growth revenue wise. Exception to this rule seems to be Guiliu Expressway which registers double digit growth annually over a long period of time - pity, it has the shortest remaining concession lifespan.

Our fellow buddy Drizzt has shared his views on the 2Q results here - http://www.investmentmoats.com/money-man...3-results/

Yes, but to me 10years is still quite a long period I just hope they will acquire another toll road before guihuang profit drop < 100%.

[Drizzt]

IMO they were lucky they got Guiliu and Guihuang. Those two have great growth. It is only recently Beilun surprises and its tenure is rather short.

You probably need 3bil to acquire a toll road the scale of YTW (that was 2.7bil for the 51% stake). I suppose i am comfortable with a 20% net debt to equity on the parent level. which will be around 3000 bil in debt.

Assuming after they pay off the debt at toll road level, and the depreciation and interest saved can flow up as return of shareholder loans from parents, we could be looking at roughly 1400 mil.

A full dilution will need 400 mil to pay 6 cents dividend. the other 1000 mil can be saved to acquire another YTW in 3 years (if there are so much toll roads to acquire!)

[Jack31]

IMO they were lucky they got Guiliu and Guihuang. Those two have great growth. It is only recently Beilun surprises and its tenure is rather short.

You probably need 3bil to acquire a toll road the scale of YTW (that was 2.7bil for the 51% stake). I suppose i am comfortable with a 20% net debt to equity on the parent level. which will be around 3000 bil in debt.

Assuming after they pay off the debt at toll road level, and the depreciation and interest saved can flow up as return of shareholder loans from parents, we could be looking at roughly 1400 mil.

A full dilution will need 400 mil to pay 6 cents dividend. the other 1000 mil can be saved to acquire another YTW in 3 years (if there are so much toll roads to acquire!)

Thanks for the great article kyith, nice blog. Learned alot from there. Pity jiurui did not go thru with just 75m cash.
Hopefully Mr market will recognize the good result coming Monday.

[Drizzt]

Well i find that one problem is the difficulty in finding yield accretive toll roads. The management seem to only want to buy accretive ones (perhaps 13% IRR at least)

they took a long while to get YTW.

Jiu rui looks like an infant toll road with losses, but hindsight with the interest rate situation and china slow down, this could turn out to be safe.

[Nick]

China Merchants Hldgs (Pacific): BUY S$0.83 Bloomberg: CMH SP
Steady earnings
Price Target : 12-Month S$ 1.07
By: Paul YONG CFA +65 6398 7951

• 1H13 net profit of HK$304m (+37% y-o-y) slightly ahead of our expectations
• Core earnings growth driven by both contribution from newly acquired Beilun Port E’way and organic growth
• Interim DPS of 2.75Scts (same as last year)
• Maintain BUY and S$1.07 TP, the stock offers an attractive yield of 6.8%

Highlights
2Q earnings up 59% y-o-y to HK$176m, which includes HK$30m in forex gains. Excluding forex gains, CMHP’s numbers were slightly ahead of our expectations due to stronger than projected contribution from its JV toll roads, especially Guiliu Expressway (profit contribution +46% y-o-y to HK$38.2m) and also lower finance costs q-o-q as the Group has been paying down its loans quickly. Beilun Port Expressway, acquired in 4Q12, also contributed HK$31.7m in this quarter. Main asset Yongtaiwen E’way increased its contribution by almost 7% to HK$80.5m while Guihuang E’way posted a 16% increase to HK$35.3m.

Our View
Current road portfolio provides steady growth. The Group’s portfolio of 4 toll roads should underpin a steady earnings stream, driven by traffic growth. In particular, a full year’s contribution from Beilun Port Expressway will be the main driver for CMHP to post double-digit core earnings growth in FY13. We are maintaining our forecasts for now.

Disposal of property business and/or further acquisitions to be catalysts. While the Jiurui Expressway deal has been called off and an opportunity to dispose its non-core property business lost, we believe CMHP will continue to look to sell this business to fully focus on its toll road segment. At the same time, CMHP continues to be on the lookout for more toll roads to acquire to expand its business. These should act as catalysts for the stock to re-rate.

Recommendation
BUY, TP S$1.07. Our TP of S$1.07 is based on DCF and assumes full conversion of the convertible bonds. The stock is trading at 9x fully diluted FY13F PE, declining to 7.9x fully diluted FY14F PE and offers an attractive yield of 6.8%.

Source: https://groups.google.com/forum/#!topic/...X_546KRHas

CMP is trading at 85.0 cents currently which translates to a dividend yield of 6.47%.

(Vested)

[greengiraffe]

Wondering if CM Pac NZ property is located in red hot Auckland? St******'s remaining unsold apartments atop its hotel certainly has hopes to be eventually sold out...

STING IN NATIONAL'S PLAN TO HELP FIRST-HOME BUYERS

TRACY WATKINS
744 words
12 Aug 2013
Dominion Post
DOMPOS
English
© 2013 Fairfax New Zealand Limited. All Rights Reserved.
WINNERS Auckland: The house price cap under KiwiSaver will rise from $400,000 to $485,000 and the same for the Welcome Home Loan scheme. The cap has also been raised by smaller amounts in Wellington City, Queenstown Lakes, Christchurch, Selwyn, Thames/Coromandel, Waimakariri, Hamilton, Western Bay of Plenty, Lower Hutt, Upper Hutt, Kapiti Coast, Tasman/ Nelson, Tauranga and Porirua City. In all other areas the cap remains at $300,000.

Couples: A $120,000 ceiling on combined income will apply under the KiwiSaver first- home-deposit scheme - compared with $100,000 at present.

LOSERS Singles: Income more than $80,000 will push them above the ceiling for qualifying for a KiwiSaver first-home- deposit subsidy - compared with $100,000 at present.

Buyers who might have qualified for low or no deposit help from the Government previously: They will have to save a 10 per cent deposit to qualify for a KiwiSaver home deposit subsidy and Welcome Home Loan scheme.

--------------------

MORE young couples are set to qualify for government help getting into their first home - but the quid pro quo is they will have to save for longer and come up with a 10 per cent deposit.

Under changes announced yesterday by National, first-home buyers will have to save for five years on average to qualify for government assistance under the KiwiSaver first-home-deposit subsidy and Welcome Home Loan mortgage insurance scheme.

The changes are firmly targeted at Auckland, where soaring house prices have put a first home out of reach for many young people, and include lifting the cap on qualifying homes, and extending the income thresholds for couples.

But the sting in the tail is that young buyers will have to save a 10 per cent deposit before they qualify for either the Welcome Home Loan scheme or the KiwiSaver first-home-deposit subsidy, which is worth $5000 after five years, or $1000 a year, to qualifying savers.

Under the former scheme, the cheapest houses can now be bought with a low or no deposit.

The changes do not affect KiwiSavers who want to take out their own and their employers' contributions to buy a first home.

The changes, announced by Prime Minister John Key, come as the property market bursts back into life, particularly in Auckland, putting pressure on interest rates and turning the matter into a political hot potato.

Housing Minister Nick Smith said the number of first-home buyers eligible for KiwiSaver deposit subsidies would double under the changes.

But the biggest impact would be in Auckland, where unrealistically low price caps were severely restricting access to the KiwiSaver deposit and Welcome Home Loan schemes.

Last year the number of Aucklanders able to qualify for Welcome Home was only about 50 - roughly the same as Southland. That was because the qualifying price cap for government assistance was too low, at $400,000. That will be lifted to $485,000 from October 1.

Dr Smith said the Reserve Bank had already confirmed it would specifically exempt people with government-guaranteed Welcome Home Loans from any limits on new mortgages. That would effectively put the 2500 people expected to qualify under the scheme at the front of the queue.

The mean sales price in Auckland is $635,000, but Dr Smith said the cap reflected the price of a modest house in a modest suburb.

"Right now on Trade Me there's over 2000 properties in that price range."

Labour leader David Shearer said tweaks to KiwiSaver would be "little consolation to the thousands of would-be homeowners searching this weekend's property pages for an affordable home".

"Changes to KiwiSaver rules and an increase in price caps are worth supporting, but much more is needed to take the heat out of the property market."

Labour plans to build 100,000 affordable homes over 10 years to boost the pool of starter homes, and ban foreign speculators.

Green Party co-leader Russel Norman said National's plan did not address the wider affordability crisis. "Chucking a bit of cash at first-home buyers with access to fund a deposit will assist some first-home buyers. But house prices will continue to rise and many more New Zealanders will be left with no means of ever affording a house."

For many low and middle- income New Zealanders, the prospects of owning a home had receded under the changes.


Fairfax New Zealand Limited

Document DOMPOS0020130811e98c00001

[sqr]

Wondering if CM Pac NZ property is located in red hot Auckland? St******'s remaining unsold apartments atop its hotel certainly has hopes to be eventually sold out...

STING IN NATIONAL'S PLAN TO HELP FIRST-HOME BUYERS

TRACY WATKINS
744 words
12 Aug 2013
Dominion Post
DOMPOS
English
© 2013 Fairfax New Zealand Limited. All Rights Reserved.
WINNERS Auckland: The house price cap under KiwiSaver will rise from $400,000 to $485,000 and the same for the Welcome Home Loan scheme. The cap has also been raised by smaller amounts in Wellington City, Queenstown Lakes, Christchurch, Selwyn, Thames/Coromandel, Waimakariri, Hamilton, Western Bay of Plenty, Lower Hutt, Upper Hutt, Kapiti Coast, Tasman/ Nelson, Tauranga and Porirua City. In all other areas the cap remains at $300,000.

Couples: A $120,000 ceiling on combined income will apply under the KiwiSaver first- home-deposit scheme - compared with $100,000 at present.

LOSERS Singles: Income more than $80,000 will push them above the ceiling for qualifying for a KiwiSaver first-home- deposit subsidy - compared with $100,000 at present.

Buyers who might have qualified for low or no deposit help from the Government previously: They will have to save a 10 per cent deposit to qualify for a KiwiSaver home deposit subsidy and Welcome Home Loan scheme.

--------------------

MORE young couples are set to qualify for government help getting into their first home - but the quid pro quo is they will have to save for longer and come up with a 10 per cent deposit.

Under changes announced yesterday by National, first-home buyers will have to save for five years on average to qualify for government assistance under the KiwiSaver first-home-deposit subsidy and Welcome Home Loan mortgage insurance scheme.

The changes are firmly targeted at Auckland, where soaring house prices have put a first home out of reach for many young people, and include lifting the cap on qualifying homes, and extending the income thresholds for couples.

But the sting in the tail is that young buyers will have to save a 10 per cent deposit before they qualify for either the Welcome Home Loan scheme or the KiwiSaver first-home-deposit subsidy, which is worth $5000 after five years, or $1000 a year, to qualifying savers.

Under the former scheme, the cheapest houses can now be bought with a low or no deposit.

The changes do not affect KiwiSavers who want to take out their own and their employers' contributions to buy a first home.

The changes, announced by Prime Minister John Key, come as the property market bursts back into life, particularly in Auckland, putting pressure on interest rates and turning the matter into a political hot potato.

Housing Minister Nick Smith said the number of first-home buyers eligible for KiwiSaver deposit subsidies would double under the changes.

But the biggest impact would be in Auckland, where unrealistically low price caps were severely restricting access to the KiwiSaver deposit and Welcome Home Loan schemes.

Last year the number of Aucklanders able to qualify for Welcome Home was only about 50 - roughly the same as Southland. That was because the qualifying price cap for government assistance was too low, at $400,000. That will be lifted to $485,000 from October 1.

Dr Smith said the Reserve Bank had already confirmed it would specifically exempt people with government-guaranteed Welcome Home Loans from any limits on new mortgages. That would effectively put the 2500 people expected to qualify under the scheme at the front of the queue.

The mean sales price in Auckland is $635,000, but Dr Smith said the cap reflected the price of a modest house in a modest suburb.

"Right now on Trade Me there's over 2000 properties in that price range."

Labour leader David Shearer said tweaks to KiwiSaver would be "little consolation to the thousands of would-be homeowners searching this weekend's property pages for an affordable home".

"Changes to KiwiSaver rules and an increase in price caps are worth supporting, but much more is needed to take the heat out of the property market."

Labour plans to build 100,000 affordable homes over 10 years to boost the pool of starter homes, and ban foreign speculators.

Green Party co-leader Russel Norman said National's plan did not address the wider affordability crisis. "Chucking a bit of cash at first-home buyers with access to fund a deposit will assist some first-home buyers. But house prices will continue to rise and many more New Zealanders will be left with no means of ever affording a house."

For many low and middle- income New Zealanders, the prospects of owning a home had receded under the changes.


Fairfax New Zealand Limited

Document DOMPOS0020130811e98c00001

http://www.cmhp.com.sg/business-overview.htm

The property development business principally comprises brand new completed homes in the greater Auckland area of New Zealand. CMHP carries out its property development business through its investment subsidiary - China Merchants Pacific (NZ) Limited and its operating subsidiary - Universal Homes Limited.

[zz...]

It has 9.4b intangible assets on the balance sheet, any potential risks to destroy this?