Golden Geezer

Hello - is anyone going to the AGM? I think it's tomorrow, it'd be interesting to hear if they have anything to say about their poor performance. I note that they have yet to release their Q1 trading update, which they generally send out before 15 May, maybe they will send it out tonight before the AGM.

Hi, does anyone have a copy they could share? It seems to have been released recently based on this article: https://www.wsj.com/articles/hedge-fund-honcho-kyle-bass-takes-aim-at-hong-kong-time-bomb-11556185488 TIA

Has anyone been following the group recently? They clearly overextended themselves with their real estate ventures (Yellow House empty for over a year, development in Hengqin) and food souvenir business. The business park in Hengqin where the development is located was criticized by the Macau government over the summer: http://www.macaubusiness.com/macau-traditional-chinese-medicine-park-houses-25-local-companies/, so it may be difficult to sell it until the park has actually shown promise... On the other hand, they have done well in Hong Kong, opening an 18,000 sq ft food court in the new high speed West Kowloon train station to China: https://www.scmp.com/news/hong-kong/hong-kong-economy/article/2167335/owner-hk35-million-food-court-west-kowloon-station They've also won, per the 2017 FS, the food counters contracts for the K11 Musea project (https://www.k11musea.com/en/) opening this year in the center of Hong Kong. It's good that they seem to be winning contracts in large scale projects in Hong Kong, so must have built their profile in HK. Still I'd like to see their share price reflect the potential, possibly after they have finally dealt with Hengqin and got the food souvenirs business to break even. I'd be keen to hear the thoughts of anyone still following them.

This stock seems to be finally rerating. Some catalysts: 1. (Potential) Sale of part or all of Hengqin as per the recent trading update. 2. A potential new tenant for Yellow House, which they are finally “actively searching” per the last two updates to the market (see my previous rant above). 3. The new logistics centre coming on in June. This may help control food preparation costs and also bids for canteen contracts (eg for casino workers, though I am not sure how likely this is). 4. Food Souvenir division finally nearing breakeven. 5. Completion of Macau-HK bridge and continuing good numbers for Macau GGR, which is reflected in the valuation of larger groups with Macau exposure but not reflected in FB’s valuation. On the negative, the company seems to really struggle controlling costs, but good that numbers are improving.

Does anyone know why management has failed to lease the Yellow House - supposedly prime Macau real estate - for more than 13 months, since Forever 21 terminated the lease? I am shocked that this appears to still be vacant and makes me question whether management are truly trying to turnaround the business or are looking for a cheap take private. I'd be interested in other people's thoughts, especially as I saw some comments saying that they had spoken to management a few months ago.

The group has received the (conditional) offer I was hoping for when I first posted about this opportunity: https://www.investegate.co.uk/revolution-bars--rbg-/rns/statement-re-possible-offer/201707311622556392M/ The conditional offer price of 200p seems cheap to me, and the share price remains around 175p. I am holding onto my shares for the time being, in the hope of a higher offer.

This is a UK operator of bars, listed on the LSE, which dropped by 40% on Friday following a profit warning. This seems excessive when they simply announced that they would not be growing in 2017 ("adjusted EBITDA...expected to be broadly at the same level as last year"), due to a lack of control over costs as they focused on the roll-out of new sites.This was likely due, in my mind, to the recent change in CFO, who apparently left for valid family reasons. Two broker notes on Friday forecasted a reduction of earnings of 12% and 22% respectively for the year as a result. It's a debt free roll out, cash generative, dividend paying and trading at a low EBITDA multiple (adj. EBITDA was GBP15.6m last year). At a current market cap of only GBP60m - 70m and net cash flow from operating activities of GBP14m last year, it could be an attractive take-over candidate. The group was previously PE owned.

It's clearly been a slow and painful turnaround, not helped by the structurally loss making food souvenir business as well as the failures of all the restaurants in the Huafa Mall. All in all the business is recovering but the problem is that the margins remain poor, and the question is whether this is temporary (due to opening new restaurants) or permanent (due to inflation in Macau). This is especially concerning when I hear of management considering expansion into Taiwan when they have no base or presence there that I am aware of, which will again increase costs significantly. For me the crucial change to watch for will be the introduction of their new central kitchen and logistics center. The latest update said the center was nearly completed. This may help them to be more efficient for the food preparation and to finally increase their margins. The other question being whether this will enable them to win some industrial catering contracts (see http://quinzedix.blogspot.hk/2014/07/future-bright-part-2.html for a little more about the opportunity) which would be a big bonus. The investment in the development of the Jia Jing food court in Hengqin (http://www.zhsswj.gov.cn/en/NewsCenter/News/201702/t20170206_16091376.html) may also delay the payment of a dividend for some time (even if they find a co-investor), which reduces the likelihood of a rerating.

This is rerating quickly, with some very large volumes, in expectation of decent H1 results in the new few weeks showing that they have finally turned the corner. Macau's GGR is expected to finally show some growth in September after a slide of over 2 years.

I also sold down at around HK$9.30, this is quite a volatile stock with a support around HK$5 which it seems to test every year or so. I wanted to take some profits, as I was up approx. 75%. If TPP gets signed then I will lose out a lot but it seems unlikely. I would buy again if it went back down to HK$6-6.5. It's still a great business.

Following the release of their 2015 results, FBH's stock price is currently rerating. Their market cap at the moment is equivalent to the value of the office in Hong Kong and the building in Macau that they own. Assuming Macau sentiment stabilizes then I could see FBH's share price doubling from here if: 1. They continue to focus on mass market (as announced in the FS, e.g. with 3 new restaurants in Hong Kong). 2. They find a partner for the Hengqin development (as hinted at in the FS), or delay the building. 3. The initial investment in getting the new food souvenir business off the ground reduces and they finally break even. They have clearly revised their strategy by opening smaller shops/kiosks. This gives them more flexibility to adjust their sales strategy. The results in the last 18 months have been impacted by the general Macau sentiment (especially the expensive Japanese restaurants in the casinos), heavy investments in the food souvenir business and some mistakes (mainly the 19 food courts in Huafa mall – now closed), but they have amended their strategy to focus on mass market. Their valuation looks very cheap when stripping out these non-recurring expenses.

Texhong is motoring along nicely. A good set of results and a very smart founder which has positioned them well: http://www.just-style.com/analysis/is-vietnam-ready-to-reap-the-benefits-of-tpp_id127463.aspx?utm_source=insights-feed&utm_medium=rss-feed&utm_campaign=rss-feed

Texhong should be well positioned to benefit from TPP: http://www.barrons.com/articles/4-stocks-to-win-from-trans-pacific-trade-deal-1444202959

I agree with the analysis by Heisenberg above. This is very cheap, and they have a sufficiently flexible business model (e.g. by closing non-performing businesses, as they have just done for the Huafa food courts), yet they're priced for liquidation. Their core F&B business remains in a decent shape, in an incredibly tough Macau environment. A slight increase in GGR and the turnover in the high margin Japanese restaurants will improve. My sense is that the stock is getting caught in the general rout in HK/China and the market is anticipating the announcement that no dividends will be paid this year. The board of directors meeting will take place Monday so we should be getting a further update thereafter. The previous release mentioned "more updated business development" following this meeting. Any positive news from a food catering or Hengqin perspective could have a big impact. I think building in Hengqin is supposed to start in November. The risks are: (1) anything relating to their high profile chairman (2) taking the group private whilst its so cheap (3) dilution in order to fund Hengqin.

This is a really good analysis - thanks! I held the stock for a year last year and sold it when the year end results were announced. I want to go back in, but am waiting for mid-year results. A few thoughts/concerns: 1. The Vietnam hotels generate most of the cash. Following the anti-China results last year, a lot of tourists have avoided Vietnam of late (see http://vietnamtourism.gov.vn/english/index.php/items/8692) so I am not sure how good the figures will be this year. 2. Macau RE numbers for May 2015 were down 12.6% compared to April 2015 and 21.5% compared to May 2014 (see http://macaubusinessdaily.com/Property/Macau-house-prices-down-126-pct). The owners don't seem to be in a rush to sell their Macau RE, so I wonder whether this will delay sales in Macau for another few years. All in all it's a great stock, but am not sure when the stock will re-rate.