Share price reaction Mandarin’s announcement was kinda expected. However, the sharp pull-back is illogical as the management is still considering options to deal with the Excelsior Hotel site to enhance shareholder value.
These are some of the potential options :-
- Sale of Hotel to sister company Hongkong Land. This has to be at arm’s length.
- Part sale of the site and develop on joint venture basis (with another Developer)
- Develop the Hotel site
The first option is most preferred and should have the support of minority shareholders. The least preferred is the last option.
MO is a deep value play (last reported NAV of Usd 3.13) and with the closing price of Usd 2.01 yesterday, Price/Nav is back at 0.64. The value of Excelsior site has appreciated and this has not been accounted for.
The other major (deeper) hidden value is its Hotel at Hong Kong Central, a prized prime site (overlooking Star Ferry and has a wide waterfront view). I expect the Management to conduct a review of this Central site (last reported 60% occupancy rate) and to determine its future usage.
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