0703.HK - Future Bright Holdings

[Genyi]

The Yellow House has been rented out for 8 years !

 

https://innovo.etnet.com.hk/eng/ca_calendar.php

 

On this link, you will also find a new loss alert for the quarter ending 30 june 2019. The loss for the second quarter is 52.1 HK$’million, of which 21.1 is a net fair value loss in the valuation of the Yellow House. (It is not clear if this devaluation was done in response to the new tenant agreement, or had been established already before that).

 

The restaurant operation results show a mixed picture. They provide many statistics in the loss alert. In my opinion, it does not look good, however not terrible either.

 

At the end, more details about the Hengqin Island property are provided. Nothing concrete here, but there seems to be some movement at least.

[Laxputs]

Thanks for that.

[Genyi]

The Hengqin development has been sold !

 

https://innovo.etnet.com.hk/eng/ca_calendar.php

 

This is an enormous relief in my opinion. Many details in the linked document on that page. Let me focus on the bigger picture with an earlier quote from the forum...

 

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.

 

It took a while, but it looks like all these 5 catalysts have now been realized. Not that I am ecstatic: the visitor arrivals to Macau are stabilizing and the visitors are spending less per visit. But it seems that the major headaches for FB are out of the way and the management can focus on opening/closing the right restaurants at the right locations.

 

 

 

[yzstevie]

What is the reputation/track record of the largest shareholder?  For HK small/micro caps the biggest risk is always the controlling shareholder killing the company through often undisclosed connected transactions...

[Laxputs]

Will FB make it through? They've had the toughest of times with the Macau gambling slowdown, the HK protests, the China-US tensions, and now the most severe: Covid.

 

Selling the Hengqin development in Dec 2019, and getting a tenant signed to start paying April 2020 for their lease property are positives. But I have no idea how they'll fare.

 

Thoughts?

[Genyi]

Will FB make it through? They've had the toughest of times with the Macau gambling slowdown, the HK protests, the China-US tensions, and now the most severe: Covid.

 

Unfortunately, FB didn't release any details on the situation so far, making it impossible to make a guess whether the business is still a going concern. But yesterday, they released a Loss Alert and provided some additional financial data with it. There is no full P&L, Balance Sheet nor Cashflow statement but the document is useful enough to check out. I might type some comments on it later.

 

Selling the Hengqin development in Dec 2019, and getting a tenant signed to start paying April 2020 for their lease property are positives. But I have no idea how they'll fare.

 

From the loss alert: the Group’s investment property in Macau has generated steady rental income in the First Quarter and will continue to be so.

 

No issues here, which is a positive surprise to me. I assumed that whoever took the lease would be in the retail business and hence in a difficult profit/cashflow situation. If someone here lives in Macau, or knows someone there: a personal observation of how the building is used right now might be useful (“S. Paulo”, Largo da Companha de Jesus N°2, Yellow House on the right side where the stairs towards the St. Paul ruins start).