Metro Holdings

The decent historical yield aside, Metro has a tortoise mentality that cannot attract enthusiasm of investors. U have to go beyond the yields and cash in the bank -- and start to decipher the mindset of the management and the possibilities of the company in the next few years. The outlook is not so sexy.

'greengiraffe' of Valuebuddies.com put it most accurately:

Based on the latest financial results, there is little doubt that Metro's recurrent cash generated from operations is around the ordinary dividend rate of 2 cents a share.

However, even after netting off the current of 6 cents to be paid, the net cash sitting on the books of 46 cents (which excludes another 20 cents in liquid short and long term investments) remains glaring especially relative to the last traded share price of 77cents and NTA post dividends of S$1.28.

Management's inaction with regards to strategies on narrowing the gap between mkt price and underlying worth of the company underlines the lack of value that is assigned to either the cash hoard or other assets sitting in the company.

While one can fall back on Metro's track record in realising value in China, the latest realisation of its biggest lemon, Metro City Beijing, can be viewed as a narrow escape for the company and probably the last in the next 3 years.

As the seeds sowed for future assets realisation have visibly slowed, it is hard to forsee how Metro can sustain special dividends unless they change their dividend policy or their approach to enhance shareholders' wealth through share buybacks.

@ 88 cents ...have lots of upside still for this undervalued counter. How come sumer has not spotted this one?

Been buying Metro for a while now only because its NAV is around 1.3 and had been getting their share for around 79c..its now moved to about 95...i know they have a decent biz and decent assets but I had failed to look into the below info on their annual report...
 
The Group continues to hold a 5.0% interest in Top Spring International Holdings Limited and1.1% of Shui On Land Ltd – two leading property developers in the PRC listed on the Hong Kong stock Exchange. We remain optimistic in both companies’ long-term investment prospects; giving Metro potential access to quality property projects in Chinese cities.
 
TOP SPRING has gone up 78% the last one year and they own 5% of this company..thats a good $50m..Shui On Land has gone up 42% and its still highly undervalued...
 
I gotta give it to the metro boys, company is at 6.8 times earnings, highly undervalued still, has great property investments, very low debt, and alot of cash...
 
Seen many companies with the above dna, and they all have 3 directions they can go..
 
1) do what it can to bring price back up close to NAV levels
 
2) spin out cash to reduce NAV to current share price levels
 
3) get taken over or start selling its assets and delist
 
 

Good observation BD...in fact Metro has been giving out special dividends upon realising capital gains on disposal. Payout ratio averaged 40 odd per cent of annual profits since 2007, although no dividend policy was cited.

Cash reinvested into: FY2013: Prince Charles Crescent condo project JV with Wingtai (Sinagpore); Large CBD mixed development project in Nanchang PRC FY2014: Serviced residence acquisitions in Shanghai PRC; acquired remaining interest of their EC Mall in Beijing PRC.

Therefore, likely scenario would be point A) in your commentary. NAV WILL grow on positive fair value adjustments (PRC) and increase in income accretive assets.

garl wrote: 73 cents, seems like dead on the water. But can buy?

-- Finally, after 2 years of holding this Metro, the reward lai liao. Reached 94.5 cents. I will hold for another 2 years as I can see it going up to $1.20.