Chan Kit Whye on 1Q results of CHINA MERCHANT HOLDINGS (PACIFIC)

L-R: Guihuang Highway which comprises two roads in the Guizhou province; and the 139-km Guiliu Expressway in the Guangxi Zhuang Autonomous Region. Photos: Company

Prior to his retirement, Chan Kit Whye (left) worked more than 30 years as Regional Finance Director, Financial Controller and Manager in a multinational specialty chemical business. He has played an active role in CPA (Australia) Singapore Branch, taking up positions in its Continuing Professional Development and Social Committees.

Kit Whye is a Fellow of CPA Australia, CA of Institute of Singapore Chartered Accountants and CA of the Malaysian Institute of Accountants. He holds a BBus(Transport) Degree from RMIT, MAcc Degree from Charles Sturt University and MBA from Durham Business School.

CHINA MERCHANT HOLDINGS (PACIFIC) LTD: Q1 2015 revenue was up 6.4% to HK$494 million compared to prior year Q1, but 7% lower when compared to Q4 2014.

Profit from operations was up 2.1% to HK$299 million compared to prior year Q1, and up 10% compared to Q4 2014.

Profit attributable to shareholders for Q1 2014 declined by 4% to HK$142.2 million against prior year Q1, but up 8% when compared to Q4 2014.

Q1 2015 earnings per share was HK$0.134 (S$0.023) as there was a large increase in number of ordinary shares to 1.064 billion shares over the last 12 months.

NAV per share is HK$6.17 (S$1.06).

Current PE is at 13 times and price-to-book ratio is 1.1 times.

Bond conversion to shares continued, taking advantage of the gap between current share price and conversion price.

Currently, HK$719 million worth of bonds could be converted to shares, and if all are converted, the number of ordinary shares issued will be 1.2 billion.

The company has outstanding debt of HK$4.1 billion and a debt to equity ratio of 0.45.

Interest cost is about HK$33 million a quarter, but interest cover is 10 times which is way above normal threshold.

Free cash flow for Q1 2015 was $400 million, 50% better than prior year Q1, representing free cash flow per share of HK$0.38 for current quarter.

The five toll roads volume and revenue that contributed to CM Pacific's performance continued to do well despite easing at some of the expressways due to diversion as a result of construction activities.

Improved revenue and earnings will be achieved from new acquisitions, with strong support from its parent, China Merchant Group, which is listed in Hong Kong.

Current share price is trading cum-dividend 3.5 cts SGD and cum-bonus issue of 1 for 20.

Both daily and weekly charts are still bullish, while the daily chart sees some profit taking in the past several days.

I foresee 8 to 10 cts adjustment is share price when the company trade ex-dividend, ex-bonus on 12 May.

Long term prospect for this company is good provided that there is no major negative shift in China's stance toward toll road charges.

Chan Kit Whye on 1Q results of CHINA MERCHANT HOLDINGS (PACIFIC)

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