heisenberg Posted July 10, 2014 Share Posted July 10, 2014 Here is a company that had 9 years of positive earnings and 9 years of paying div...trading for 3*ev/ebitda and 25% fcf yield Currently they pay 4.7% dvd which is just 30% of their cash flows They recently acquired a second hotel in Macau, my 2 cents they may apply one day for a casino licence for that hotel ( currently their main hotel already operates a casino ) Has anybody else a view on it ? What do i miss ? Link to comment Share on other sites More sharing options...
Nnejad Posted July 10, 2014 Share Posted July 10, 2014 Just on the surface, but i remember reading something about a Macau license expiring in 2018. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted July 10, 2014 Share Posted July 10, 2014 Heisenberg: Yes, I also own this, and have owned it for a while. I've been watching it lately, tempted to buy more, even though it has had a run up. Earnings & the dividend appear to be increasing every year. Unfortunately, the latest dividend was up only 4%, so I guess people are angry about that and perhaps that is why it sold off. As to the second hotel acquisition...perhaps it is 2nd place to store the gamblers overnight? It would be great if they could get 2nd casino going. Crazy that this thing is trading for something like a 6 P/E with little financial leverage and a good dividend. Have you read the writeups at VIC? Fun fact...they have bars of gold embedded in the floor of their main property! Link to comment Share on other sites More sharing options...
yadayada Posted July 10, 2014 Share Posted July 10, 2014 they dont really pay out, and the top guys are Macau organized crime. So I would stay away. This thing can stay cheap forever. If you invest in hong kong stocks, they gotta pay out at least a decent amount. And not just a dribble of their cash flow. Link to comment Share on other sites More sharing options...
heisenberg Posted July 10, 2014 Author Share Posted July 10, 2014 Nnejad, I haven't read about the Macau license expiry. Thought they a 20y license starting in 2004. Do you have a link for me ? That would be something i'd like to dig in. In any case, all Macau casinos are licensed with an expiry date and I haven't heard of any not getting the renewal ( which would effectively send the stock to lose 90% ) as casinos are the bread and butter of Macau government DTEJD1997, I haven't read the writeups at VIC, yes they maybe able to free up some space for their casino in the Emperor hotel by shifting guests to the Best Western and send some guests of the Best Western to gamble in their casino. I like the simplicity of the business and i like the wild rides of the Macau stocks ( nice doubling a few months ago, sold 25% )) Yadayada, they do pay out 5% div and they have for 9 years. They've used the remaining cash generated to buy a second hotel which is fine by me if they manage to use it to apply for a casino license ( their ROE on their current casino activity is 25% ), better grow a high return business than paying massive dividend today May I ask why would HK stocks have to pay out a decent amount ? Compared to the U.S ? Link to comment Share on other sites More sharing options...
yadayada Posted July 10, 2014 Share Posted July 10, 2014 they have large amounts of cash on the balance sheet that they don't really use. and they keep hoarding. They are not investing it. it is just building up. 2.8 billion HKD now. I think earnings were like 800 million? So investors see that, and these things never trade higher unless they increase earnings. They just assume less earnings because investors will not be paid out those earnings for the most part. If they pay out like 1/5 or 1/6 in dividends, that is how high they will trade. Unless you think there will be some catalyst, these stocks can trade at a low PE forever. So what often happens because of this, is that company's that do pay out almost all the cash they don't reinvest, they sometimes trade on dividends too. Those are the ones you want to invest in. Plus insiders own very large stakes here and are crooks. So they could easily try and steal this away from shareholders some way or another. Link to comment Share on other sites More sharing options...
heisenberg Posted July 10, 2014 Author Share Posted July 10, 2014 Yes earnings are around 800 mio and they've invested 900 mio hkd on 20th Dec 2013 in another hotel in Macau. http://www.emp296.com/images/cms/1727516497.pdf So they are not sitting on their cash. They just don't take big leverage What makes you say that insiders are crooks ? Link to comment Share on other sites More sharing options...
yadayada Posted July 10, 2014 Share Posted July 10, 2014 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/emperor-entertainment-hotel-(epetf)/ And it doesn't make sense to hoard that much cash. If they were very honest, id think they do it to use it when that whole bubble burst to snap up the bargains. Id rather go with keck seng to be honest. I trust them more then these guys. And there is more upside to be had there (and way more diversified assets globally). Link to comment Share on other sites More sharing options...
thefatbaboon Posted July 11, 2014 Share Posted July 11, 2014 Isn't Keck Seng sitting on $2bn of cash? Link to comment Share on other sites More sharing options...
yadayada Posted July 11, 2014 Share Posted July 11, 2014 they pay out bigger % dividends, and a 1-2 year catalyst unlocking another 1.5-2.5 billion Hkd. Also they seem more legit and trustworthy. And their operations are not possibly part money laundering but are all over the globe. Link to comment Share on other sites More sharing options...
jawn619 Posted July 9, 2015 Share Posted July 9, 2015 Emperor Entertainment Hotel Ltd is a Hong Kong listed, consistently profitable, $270M market cap casino It has a 5 year average net income of around $60-70M/year, Trading at less than 5x normalized net income. Management has a controlling interest. The company has a surplus of cash that it deposits in Chinese banks, which generates high interest income(market rates for short term deposits in China can get up to 6%) http://www.emp296.com/eng/investor/highlights.php for more info. Revenues have started to decrease for the first time in 5 years. P.S. I have no position but started looking... this could get interesting if China continues to fall Link to comment Share on other sites More sharing options...
randomep Posted July 9, 2015 Share Posted July 9, 2015 Hasn't this stock been mentioned several times. I said this before in the other thread. The guy who runs it is a scary guy who has gone to jail and threatens to break employee legs. That turned me off it despite the great financials. I am not saying you should dismiss it. I am just telling you that is probably the catch. Link to comment Share on other sites More sharing options...
Jurgis Posted July 9, 2015 Share Posted July 9, 2015 The guy who runs it is a scary guy who has gone to jail and threatens to break employee legs. He will only break your legs if you try to sell the stock. So if your holding period is forever, this is a great deal. ;D Sorry. ;D Link to comment Share on other sites More sharing options...
heisenberg Posted July 10, 2015 Author Share Posted July 10, 2015 please provide the link about this jail event, I can't find it. I have been a shareholder of this stock since October 2011. Since that time I have been paid back HK$0.473 of dividends...so 42% of my investment. They are still yielding 6.67% divi yield and have been paying dividends for the last 10 years So management is rather shareholder neutral and I know no crooks who would pay religiously dividends to his shareholders for such a long period They've had positive earnings and free cash-flow every single of the last 10 years Number of shares is stable Plus they have been accumulating cash in the prospect to acquire a second casino when the time is ripe ( when Macau GGR stabilize ? ) There is no company with such history and such metrics on the U.S market at the moment...but I would be happy to be proven wrong Link to comment Share on other sites More sharing options...
randomep Posted July 11, 2015 Share Posted July 11, 2015 the owner's link: https://en.wikipedia.org/wiki/Albert_Yeung I reiterate: I am not saying this is a bad investment based on merit. I am just saying I am a bit suspicious of the owner and therefore I passed it over. I instead bought Soundwill Holdings HK:878 http://bovinebear.blogspot.com/2015/06/why-i-bought-soundwill-holdings.html. I'll definitely give Emperor a 2nd look this weekend. Link to comment Share on other sites More sharing options...
theasiareport Posted July 11, 2015 Share Posted July 11, 2015 Just a word... If you're going to invest in Macau Casinos, don't expect any of them to be run by "clean management" - even though they haven't been convicted of anything before. It just comes with the territory. (Ever wonder how some property developers get ultra cheap pieces of land which they turn and develop to sell for insane profits?) It takes a certain kind of person to thrive in this environment. Figure out whether the "owner" has a large majority in whatever stock you're looking at, and whether that's his main investment vehicle to pay himself so you can profit when he profits. The concept of shareholder rights is fuzzy at best. PS: Comments not specific to Emperor Entertainment but to the Macau companies in general. Link to comment Share on other sites More sharing options...
heisenberg Posted July 13, 2015 Author Share Posted July 13, 2015 The Albert Yeung you have mentioned is not a director of the company ( see the annual report published on Friday ) : http://www.emp296.com/pdf/Annual%20%20Interim%20Reports/ew0296_Annual%20Report.pdf If you make a quick comparison with many American companies discussed on this board ( SODI, BFCF, E.TO come to my mind ), this company is model of corporate governance and has years of operation and dividend history to back it up. Beware of the home bias kind of thinking ( U.S against the rest of the world ) This annual report is worth reading the full 85 pages Link to comment Share on other sites More sharing options...
randomep Posted July 13, 2015 Share Posted July 13, 2015 The Albert Yeung you have mentioned is not a director of the company ( see the annual report published on Friday ) : http://www.emp296.com/pdf/Annual%20%20Interim%20Reports/ew0296_Annual%20Report.pdf If you make a quick comparison with many American companies discussed on this board ( SODI, BFCF, E.TO come to my mind ), this company is model of corporate governance and has years of operation and dividend history to back it up. Beware of the home bias kind of thinking ( U.S against the rest of the world ) This annual report is worth reading the full 85 pages Yes it is worth reading but did you read it? On page 19 it says the Chairperson Ms Luk is the wife of Albert Yeung and she owns 62% of the company. I cannot argue the merits of the company's corporate governance but I'd think anyone who makes a statement about corporate governance should know who the owners are. Link to comment Share on other sites More sharing options...
constala Posted April 14, 2016 Share Posted April 14, 2016 Is something cooking at 296 hk? strong volume today and share price up 15% ...take private on the horizon? licence renewal? activist buying? Link to comment Share on other sites More sharing options...
heisenberg Posted November 1, 2017 Author Share Posted November 1, 2017 EEH earned last year HK$ 0.27 has a current P/E of 7 EV/EBITDA of 2.35 FCF yield of 16% Dividend yield 4.5% (11 years in a row of paying dividends) Piotroski=8 Trigger: - return to growth at the half-year earnings announcement mid-November Latest news is that Macau Oct GGR is up 22.1% Yoy, I would expect to translate into at least 5-10% growth for EEH - use of the cash on the balance sheet (HK$3.9 billions) for an acquisition (sadly no history of buy-back and no plan to bid for a direct casino licence in 2020). Last acquisition was an hotel in Macau for HK$1 billion 2 years ago. I keep my portfolio 100% invested in cash heavy stocks that will be in position to make good use of that cash if the market crashes. Better that being 70% invested in debt heavy stocks. I think they will be in a better position to spot opportunities in their respective industries if Mr Market offer it to them. If no crash, happy to wait and collect my (too small) part of the FCF (4.5% dividend out of 16% FCF) and get the China monetary growth on my investment (to simplify the money minted in China always finds its way to the casinos on average) Link to comment Share on other sites More sharing options...
s8019 Posted November 1, 2017 Share Posted November 1, 2017 I googled Macau casion license renewal. I have no idea though what is going on there. http://macaudailytimes.com.mo/legislative-assembly-davis-fong-acknowledges-role-gaming-license-renewal.html Link to comment Share on other sites More sharing options...
heisenberg Posted April 20, 2018 Author Share Posted April 20, 2018 Buy-backs started Now, cheap with a catalyst http://iis.aastocks.com/20180419/003115627-0.PDF Concerning the license renewal, if smaller casinos are given the opportunity to bid so they have the necessary cash If not, they will remain a satellite of SJM and SJM is likely to get its renewal Next event is the AGM in June, I will be present Link to comment Share on other sites More sharing options...
serendibz Posted April 20, 2018 Share Posted April 20, 2018 Buy-backs started Now, cheap with a catalyst http://iis.aastocks.com/20180419/003115627-0.PDF Concerning the license renewal, if smaller casinos are given the opportunity to bid so they have the necessary cash If not, they will remain a satellite of SJM and SJM is likely to get its renewal Next event is the AGM in June, I will be present Don't count on the share buybacks amounting to anything significant. Their last share buyback was in 2008 of around 22m shares, and did not reduce share count by a meaningful percentage. In general, I hardly see any HK listed companies who are anywhere near as cannibalistic as their US counterparts. It idea of share buybacks has not really caught on in this region yet. Link to comment Share on other sites More sharing options...
heisenberg Posted April 22, 2018 Author Share Posted April 22, 2018 You are right but contrary to U.S stocks they give you higher dividends yields. Since dividends in HK come tax-free, I don't have a strong preference between buy-backs and dividends. In Emperor case, they offer 4.7% yield, if they top that with say 2.3% of buy-backs a year, it gets me a 7% return a year. 7% a year on a stock valued where it is {ev/ebitda=1.7, p/b=0.65}, consistently profitable and no leverage, in the current market is all I ask for Another small cannibal is 635.HK, share count reducing 5 years in a row on top of a 5.5% dividend yield, same kind of play Link to comment Share on other sites More sharing options...
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