NTP - Nam Tai Property

[lathinker]

NTP has been on my watchlist for quite a while but finally became part of the portfolio today. It is trading in net-net territory.

 

The company changed its name and focus last year from Nam Tai Electronics. Nan Tai used to be an Electronic Manufacturing Services (EMS) company and supplier to computer, phone and smartphone makers.

The company exited this business last year due to shrinking margins in the area it operated. Instead, it will focus on developping its real estate, most of which is located in the Shenzhen area.

NTP is a Chinese company, but it has been listed in the US for a long time and I find their reporting relatively clear and transparent. It has been listed on Nasdaq since 1988.

 

Over the last year, NTP has been selling its manufacturing assets and started to develop its real estate. The company owns the land under long-term leases and expects to team up with Joint Venture Partners for the development.

 

What makes NTP an interesting story is its balance sheet. The comany has 300 mm USD in cash and fixed-income securities and only 40 mm USD in debt. There are pretty muh no other liabilities. So we have 260mm USD in net cash versus a market cap of around 220mm USD. Also, you get all the land for free.

On Nam Tai's website, you can find various appraisals of this land, the most appraisal reads in the area of 200 mm USD.

 

http://www.namtai.com/investors#investors/real_estates

 

Risks are that NTP which has not been a property development company burns cash in the development process. However, Mr. Koo, NTP's founder and chairman has a reputation for efficiency - he also has a significant portion of his money in NTP. NTP is paying a 2% dividend plus they are repurchasing shares at the moment which makes sense to me given their discount to book.

 

Irving Kahn is one of the largest shareholders.

 

Questions welcome, I appreciate your thoughts on this one.

[greenwave]

NTP has been on my watchlist for quite a while but finally became part of the portfolio today. It is trading in net-net territory.

 

The company changed its name and focus last year from Nam Tai Electronics. Nan Tai used to be an Electronic Manufacturing Services (EMS) company and supplier to computer, phone and smartphone makers.

The company exited this business last year due to shrinking margins in the area it operated. Instead, it will focus on developping its real estate, most of which is located in the Shenzhen area.

NTP is a Chinese company, but it has been listed in the US for a long time and I find their reporting relatively clear and transparent. It has been listed on Nasdaq since 1988.

 

Over the last year, NTP has been selling its manufacturing assets and started to develop its real estate. The company owns the land under long-term leases and expects to team up with Joint Venture Partners for the development.

 

What makes NTP an interesting story is its balance sheet. The comany has 300 mm USD in cash and fixed-income securities and only 40 mm USD in debt. There are pretty muh no other liabilities. So we have 260mm USD in net cash versus a market cap of around 220mm USD. Also, you get all the land for free.

On Nam Tai's website, you can find various appraisals of this land, the most appraisal reads in the area of 200 mm USD.

 

http://www.namtai.com/investors#investors/real_estates

 

Risks are that NTP which has not been a property development company burns cash in the development process. However, Mr. Koo, NTP's founder and chairman has a reputation for efficiency - he also has a significant portion of his money in NTP. NTP is paying a 2% dividend plus they are repurchasing shares at the moment which makes sense to me given their discount to book.

 

Irving Kahn is one of the largest shareholders.

 

Questions welcome, I appreciate your thoughts on this one.

----------

lathinker,

The following are some of my recent work notes relating to  Nam Tai’s plan to  transition the company to commercial real estate development in China .

 

….Mr. Koo apparently has a very experienced business partner Mr. Peter Kellogg; (a well experienced long term U. S. based  investor).

 

As I recall reading recently, Mr. Kellogg holds 6.4 million shares of Nam Tai directly and holds another 5.7 million shares through I.A.T. Reinsurance.

 

Back in the early 1970’s, Peter Kellogg took over as CEO of Spear, Leeds & Kellogg…( a company that I believe Mr. Peter Kellogg’s father had earlier helped found).

 

Later , about 2000 or so, Peter Kellogg orchestrated the sale of the company to Goldman Sachs for $6.5 billion. He invested the proceeds in I.A.T.

 

From my past work notes, I think  Mr. Koo and Mr. Kellogg together  hold over  30% of the shares of NamTai Properties ……

 

 

From my memory of reading the appraisals, my take at the time was  that the approximate appraised value of Nam Tai’s China land holdings (along with their cash on hand and  other l balance sheet investments)  should have  totaled  roughly about $ 10 to  $14 per share **(?).

 

**I have not put a great deal of time into trying to verify the assumptions that were presented by the appraisers. **

------------------------------

 

Additionally, I think Nam Tai has since bought back maybe 2 or 3 % of their shares in accordance with their previously announced 2014 buy back plan.

 

greenwave

 

 

[lathinker]

greenwave,

 

thanks for sharing some details on Peter Kellogg and his shareholding.

According to the latest 20F, he indeed owns 14.3% of NTP directly and 12.8% through IAT REinsurance. Mr. Koo owns 12.7% and Kahn Brothers 6.1%.

 

I would not claim to be an expert on Chinese land valuation, but 10-14$ per share would indeed make sense if you add their net cash to the appraised land value. At curent prices you can buy the company at 85% of net cash and get the land for free. Therefore, I see an asymmetric risk/reward profile in NTP.

 

lathinker

[ccplz]

What's the risk of the Chinese property market imploding?

[no_free_lunch]

I don't mean to be negative on the idea because I think this is a relatively well-run company.  However, when you consider the cash value you need to consider that it will mostly be spent during the development process and that they are talking 20 years to do the full property development.  So not to say it's not a bargain, it certainly looks like it is, but there is a long complicated path forward.  You really need to have confidence in their abilities to successfully develop the real estate to invest here.  I tried wading through the real estate development reports but I couldn't make heads or tails of it, there are just a lot of communication issues.  Personally I would probably need another guru investor to dive in before I could put more than a minor allocation in.

[lathinker]

NTP posted decent results yesterday including a more precise plan and timeline on their property development.

 

More interestingly, they expressed their confidence this morning by starting a share tender at 5.50 USD per share. They are looking to tender 3mm shares or around 7% of what is outstanding. Yesterday's close was at 4.50 USD.

 

“Notwithstanding the value of our real estate holdings and favorable business prospects, we believe our current stock price has been negatively impacted by unfavorable global stock market conditions and the unfamiliarity of investors with the real estate market in China. With our tender offer announcement today, we reaffirm our confidence and optimism in the long term future of the Company and continue to execute on our strategy of returning capital to shareholders,” said Mr. M. K. Koo, chairman of Nam Tai.

 

http://www.sec.gov/Archives/edgar/data/829365/000119312515148015/d915771d6k.htm

http://www.sec.gov/Archives/edgar/data/829365/000119312515150692/d916254d6k.htm

 

[hillfronter83]

I have a small position in NTP. What I liked was the margin of safty at current price. They are looking for partners to develop the land they own. Hopefully the future partner, not NTP, will burden the cost of property development, which IMO will dramatically mitigate the risk.

 

However, my estimate of the value for the land they own is probably only a few hundred million CNY. NTP only owns the land right for industrial use. To develop for commercial use (which seem to be supported by local government), they will need to pay additional fees. So upside is limited. But at current price you got this for free.

[jawn619]

I have a small position in this as well. I wasn't sure if there was that much upside with real estate development, especially in the red hot chinese real estate market, but I was pretty sure I wasn't going to lose money in this, All surprises were to the upside and breaking even from the results yesterday were a nice upside surprise.

[innerscorecard]

I took a small position before going to bed (China time), and awoke to read the full tender offer filing. Seems statistically safe to me, though not definitely safe. After a consideration of the risks, I am perfectly fine with not having loaded up on more given the information available to me at the time. Even with the price rise, it's still an easy net-net with the company tender offering over 7% of shares outstanding. But I don't fully understand what happened with the company over the past few years. I quickly checked a few Chinese online corporate records, and didn't find any obvious red flags. But I didn't do anything near a deep dive.

[walt373]

NTP is doing another tender offer, this time for 35% of shares. They are still trading under net cash so this is great for shareholders.

[portfolio14]

NTP is doing another tender offer, this time for 35% of shares. They are still trading under net cash so this is great for shareholders.

 

Have you seen the latest independent land valuation reports published on their website? NTP is at least a 50c on a dollar proposition. But it requires patience.

[jawn619]

NTP is doing another tender offer, this time for 35% of shares. They are still trading under net cash so this is great for shareholders.

 

Have you seen the latest independent land valuation reports published on their website? NTP is at least a 50c on a dollar proposition. But it requires patience.

 

Thanks for the update. Yes right now company is trading for less than cash or near cash value.

 

The valuation via investor relations values the land at $200-300M

If the tender offer is successful, NTP would be worth around $13/shr if the land is worth $200M and $16/shr if the land is worth $300M

[walt373]

If they continue with huge buybacks, then a lot less patience will be required. Either the price goes up (good) or the price stays low and the buybacks create more value (even better). Unlike other net-nets where you're just sitting around for years hoping it pops one day.

[greenwave]

http://raritancapital.com/currentideas/ntp/

---

jawn619

 

Thank you jawn619 for presenting a most insightful case for the probable future of Nam Tai Properties.

 

The principals ,...Mr. Kellogg and Mr. Koo are proven long term value creators, ...and have a long documented  track record to their credit .

 

My original investment in Nam Tai goes back a number of years , when I first learned of Irving Kahn adding to his significant position in the  predecessor company  Nam Tai Electronics. I have held this long term and added during recent pullbacks.

 

My take is that Koo, Kellogg & team are considerably more astute than many may think.

 

All of their limited public writings /disclosures lead me to believe that these guys "Know what they Don't Know " and will engage the best of the best available to bridge any expertise they may lack.

 

As some others here have stated, I continue to think this is likely a very good investment for longer term investors.

 

Thanks again for posting your summary.

 

Best to you,

 

greenwave

 

[portfolio14]

Koo exercising out of money options is intriguing.

 

Question to ask: instead of asking why Koo didn't exercise the options later, we ask why he didn't exercise them earlier.

 

Theory*: Around the time when they published the new set of independent valuation reports at the end of July, they gained confidence significantly in their development projects. Maybe they received important gov approvals. Maybe it's something else.

 

This explained why Koo let the April 15 options lapsed but decided to buy now, and why there was a 2nd buyback tender in Aug/Sept for 15m shares but the previous tender in Apr/May was only 3m.

 

And he exercised the options only after the 2nd buyback because he didn't want to screw his minority shareholders.

 

This can be pure concidence: because of the effect of the 2nd buyback, share price at $6.6 gives about the same market cap as share price at $5.5 before the buyback. (Granted that at $6.6, the underlying net cash per dollar in the shares is less now. About 10% less, if my math is correct.)

 

Look at it this way, both the 2nd buyback and option exercising have the same cause. So, we have to be careful not to double count "bullish factors".

 

p.s. *Occam's Razor.

[jawn619]

Here's a SumZero Writeup

 

 

Nam Tai Property is a Chinese company that was recently a net net. Cash+short term marketable securities-all liabilities = $26M($0.71/shr). It holds valuable hidden assets at historical cost that are likely worth multiples of its current market cap. The market is not giving the company credit for these assets but management is actively realizing value and buying back shares . Target for the stock is $11.50/share, 86% upside from today’s price.

 

The structure of this write up will include a short analysis of property values of China, a more specific analysis of the city and assets Nam Tai holds, valuation, management/large shareholders, and risks.

 

Is the company real?

The company is formerly known as Nam Tai Electronics. The company was founded in 1975, listed on the NYSE in 2003, and closed down its operating business in 2014 to pursue land development. The company has been reporting earnings for over 10+ years, paid dividends, and is very much a real company.

 

Hidden Asset, Chinese Real Estate

 

The company has two parcels of land in Shenzhen city, Guangdong province. Both parcels are about a 30 minute drive from the Nanshan district.

 

Old Nam Tai Offices

2 Nam Tai Road Xixiang Road Town Baoan district Shenzhen City Guangdong Province

Search 南太路2 Zastron China, Guangdong, Shenzhen, Bao'an on Google Maps

44,726 Sq Metres of land and 283,240 Sq Metres of Gross Floor Area.

 

Empty Lot

Guangming high tech industrial park tangwei community, gongming street baoan district shenzhen city guangdong province.

Search Hongfa High-Tech Industrial Park Dining Hall, Guangming Avenue, Bao'an, Shenzhen, Guangdong, China on Google Maps

103,739 Sq Metres of vacant land

 

Isn’t China in a real estate bubble?

 

Note: GDP per capita figures will be in USD. Property prices will be in RMB/sq metre. If you want to convert the values the conversion rate from USD to RMB is 1 to 6.51. Sq metre to Sq ft is 1 to 10.76.

 

Assuming you didn’t stop reading at Chinese real estate is valuable the burning question you probably have is how can Chinese real estate be undervalued?

 

“The Chinese real estate market is the closest thing to science fiction.” - Professor Tano Santos, Columbia Business School

 

Headlines that cite examples of the Chinese real estate market being a bubble often cherry pick a tier one city, usually Beijing, and then cherry pick a property that sold for 100-500k RMB/sq metre. Compare those prices to the average GDP per capita in China ($8,000) and it’s easy to see a bubble.

 

While many parts of China’s real estate market are frothy, and China’s housing market as a whole is overvalued, In this specific instance Nam Tai Property’s real estate holdings in Shenzhen are significantly undervalued.

 

 

GDP per Capita and RMB/Sq Metre

 

Below are GDP/capita and rmb/sq metre to buy an apartment outside city centers in major cities in the U.S. and China. These numbers are not exact, but are roughly right. (the source is (http://www.numbeo.com/cost-of-living/)

 

Shanghai

GDP per capita (USD) 15,847

RMB/Sq metre 34,398

 

Beijing

GDP per capita (USD)16,278

RMB/Sq metre 39,202

 

Tianjin

GDP per capita (USD) 17,126

RMB/Sq metre 29,287

 

Shenzhen

GDP per capita (USD) 25,038

RMB/Sq metre 48,165

 

Hong Kong

GDP per capita (USD) 38,123

RMB/Sq metre 124,841

 

Nanshan District, Shenzhen

GDP per capita (USD) 49,000

RMB/Sq metre 61,398

 

New York, New York

GDP per capita (USD) 64,460

RMB/Sq metre 70,513

 

San Fran

GDP per capita (USD) 66,790

RMB/Sq metre 61,904

 

Manhattan

GDP per capita (USD) 148,002

RMB/Sq metre 107,683

 

One conclusion, other than Hong Kong real estate prices are science fiction, is that the more productive a country/province/city/district is, the more valuable the real estate in that area is.

 

Shenzhen

 

Shenzhen is one of China’s fastest growing Tier - 1 cities and is also known as the Silicon Valley of China. It’s about a 45 minute train ride from Hong Kong and the city boasts its own stock exchange (the Nasdaq of China). In 2015 Shenzhen’s GDP per capita was $25,038 which is one of the highest for any city in China. In the Nanshan district, GDP per capita was over $49,000 which is the highest for any district in China. The Nanshan district is more productive in terms of GDP per capita than Hong Kong. We point this out to show how relatively undervalued Shenzhen real estate is. It’s important to note that most of Shenzhen’s GDP comes from technology as opposed to manufacturing. There is a popular theory, with which we agree, that the Chinese government is forcing spending and misallocating resources in the manufacturing sector. Again, we point this out to show how relatively productive Shenzhen is vs. China as a whole.

 

http://www.bloomberg.com/news/articles/2015-05-11/the-little-village-that-could-shenzhen-set-to-surpass-hong-kong

 

Shenzhen Residential Real Estate

 

Shenzhen residential real estate currently sells for 25,000 to 50,000 RMB/sq metre. The average selling price in 2015 was 33,426RMB/sq Metre. In Feb 2016, Shenzhen real estate prices had an average selling price of 48,095 per sq Metre.

 

http://www.rentinshenzhen.com/List.aspx?ptype=ForSale&page=2

 

Shenzhen Commercial Real Estate

 

In 2015, The average rent in Nanshan district was 1932 RMB/sq Metre per year.

 

http://www.colliers.com/-/media/files/marketresearch/apac/china/southchina-research/sz-property-market-2015-review-and-2016-outlook.pdf

 

Valuation

 

The company values its land rights on it's books at $11.5M. It values its property plant and equipment that was originally purchased in the early 90s at historical cost - accumulated depreciation for $26.9M

The total book value of the land totals $38.4M($1.05/shr)

 

The company has had 3 independent valuations done in July 2015 with valuation for the total of the two parcels ranging from $221M USD ($6/shr) to $441M USD ($12/shr). The valuation reports can be found on http://www.namtai.com/investors. Since then housing prices in Shenzhen have increased but let’s take a closer look at the assumptions the firms used at the time to value the land.

 

2 Nam Tai road. in 000s of rmb (based on 283,240 Sq Metre GFA)

 

Valuation 1 (Jones Lasalle) 896,000 (3,163 RMB/Sq Metre)

Valuation 2 (DTZ) 1,152,000 (4,067 RMB/Sq Metre)

Valuation 3 (Savills) 1,850,000 (6,532 RMB/Sq Metre)

 

 

Guangming high tech industrial park(Based on 103,739 Sq Metre Land area)

 

Valuation 1 (Jones Lasalle) 550,000 (5,302 RMB/Sq Metre)

Valuation 2 (DTZ) 395,270 (3,810 RMB/Sq Metre)

Valuation 3 (Savills) 1,022,730 (9,859 RMB/Sq Metre)

 

The numbers used in the valuation reports are conservative. The margin of safety comes from Nam Tai valuing their land at 3,163-9,859 RMB/sq metre while properties in Nanshan 30 minutes away sell for almost 50,000RMB/sq metre.

 

Quick Valuation

$207M Cash+Short term investments

-$6M All Liabilities

+$220.76M Land + Property (lowest of independent valuations)

= $422.2M

 

$422.2M/36,700 shares outstanding = $11.50/shr

 

How much progress have they made developing this land?

The company has obtained a permit for site planning and is currently partnering with WSP Parsons Brinckerhoff and Currie & Brown in the planning and development phase. Based on the current timetable, the construction of the Gushu project is expected to commence no earlier than 2017.

Other recent developments and relevant news relating to the Gushu area include: 1) a new underground subway line has been earmarked for construction under the land; 2) a bus terminal has been designated to be built within on Gushu land; and 3) Gushu land is only 4km away from the expanded planning zone of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone.

 

Management and large shareholders

 

CEO Charles Koo owns 16.1%, Peter Kellogg owns 15.2%, and Kahn Brothers own 9.93% of shares outstanding. Management have completed 2 tender offers. In the most recent tender the company offered to buy back 35% of the shares outstanding for $5.50/shr but couldn’t get the full allocation. As Ralph Waldo Emerson said, what you do speaks so loudly I cannot hear what you say. Senior management's ownership aligns them with passive shareholders.

 

Notes:

 

NTP’s Cash balance last year earned around 4% interest. Rates were cut but the balance should still bring 2-3% this year if the government doesn’t cut rates further. This comes out to be $8-10M of interest income

 

There is more upside if management get off any more tender offers off, which is very likely.

 

Risks

There is a small amount of cash burn, and a risk is that the company will burn too much cash trying to realize the land value. Nam Tai has stated that they are looking to joint venture with developers to build the land, probably because they want to preserve the cash balance to buy back more shares.

 

The biggest risk is that Chinese Real Estate is not in your or our circle of competence.

 

Some extra info on Chinese real estate

 

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwisxYmp_KLLAhUJLyYKHQ7CDoYQFggcMAA&url=https%3A%2F%2Fwww.princeton.edu%2F~wxiong%2Fpapers%2FHousingBoom.pdf&usg=AFQjCNFMWNQKCeaUctXmRaiest4VpI7Ubw&sig2=pyLVafI4QshBJKHjkIPOVA

[jawn619]

Looks like this has traded well. Here's a link to the formatted thesis.

 

http://raritancapital.com/wp-content/uploads/2016/08/NTP.pdf

[lathinker]

Jawn, thanks for your update and for sharing the thesis. I am still owning NTP and have been following the recent run-up in share prices.

 

I think that a few recent events may have helped the share price:

 

- Koo exercised OTM Call Options again (Strike Price  of 8 USD/share, he exercised when stock price was <7 USD)

- Company announced 50mm USD share buyback to be performed in September. Given the higher share price, I would not bet that they go ahead here but find it quite comforting that they apparently  still consider themselves overcapitalized, even as construction activities start

- Company signed a "strategic cooperation" with  CCB, including a 750mm USD 5y loan for construction activities, indicating that they are indeed getting closer to starting construction.

 

Also, worth mentioning  that they got some updated land valuation reports. Taking these into account and employing the same conservative valuation methodolody you use, I get to a current value of 11.99 USD/share.

 

Attaching my calcs for reference.

 

lathinker

 

Valuation_NTP_2016_06_30.xlsx

[Maple Fun]

I am a bit disappointed about this.

Share repurchased result announced: http://www.namtai.com/sites/default/files/NTP%20-%20Final%20Report%20on%20Share%20Repurchase%20Program%20%28final%29.pdf

 

For the $50 m plan, they only bought shares with a value of $6 m

 

any thoughts?

 

There are a lot of China real estate plays (with larger discount) in Hong Kong market. The advantage for NTP used to be its shareholder friendly policy.

[portfolio14]

 

http://www.scmp.com/business/article/2093574/hong-kongs-electronics-king-koo-spend-us116b-two-duel-purpose-property?utm_source=t.co&utm_medium=referral

 

[atbed]

 

http://www.scmp.com/business/article/2093574/hong-kongs-electronics-king-koo-spend-us116b-two-duel-purpose-property?utm_source=t.co&utm_medium=referral

 

This was a great find. I doubt anyone was expecting as much as Koo's guidance. If he's right, this is a fantastic buy. Especially, considering the shortened development period disclosed in 1Q17 results.

[greenwave]

 

http://www.scmp.com/business/article/2093574/hong-kongs-electronics-king-koo-spend-us116b-two-duel-purpose-property?utm_source=t.co&utm_medium=referral

 

This was a great find. I doubt anyone was expecting as much as Koo's guidance. If he's right, this is a fantastic buy. Especially, considering the shortened development period disclosed in 1Q17 results.

-----

 

The very optimistic comments below are from another message board last week-- posted  in response to the news article referenced above :

 

....."Today's article in South china Morning Post gives update on the projects. The numbers are eye-popping !

 

http://www.scmp.com/business/article/2093574/hong-kongs-electronics-king-koo-spend-us116b-two-duel-purpose-property

 

After the factory sites have been be turned into commercial and residential projects, they are expected to deliver an extra HK$1.5 billion to HK$2 billion (US$192.68 -256.90 million) in profit every year to investors — around ten times more profitable than if the sites were left strictly manufacturing,” Koo told South China Morning Post at the launch.

 

That's a profit of $5-7/share" ........

 

 

...." I have held on to many NTE / NTP shares for at least 5-6 years, Koo is one level headed CEO, he knows many people and knows how to get things done.

 

Let say you have 10,000 shares, providing a annual return of $6 /share, which I say is low, this stock could be a great retirement investment to own. How would you like an extra $60,000 per year for retirement. I need 3-4 years more before retiring, maybe it is time to back up the truck and load up on NTP.

 

NTP investment in this project is backed by the govt, so, no roadblocks in front, only the timeline to meet. I go to China a lot and I will tell you, they always under estimate their timeline and always over achieve it. So do not be surprised if this project opens sooner than they say.

Even if they sell out, the stock should be trading up to the $85 / share range within 3 years."......

 

greenwave

 

[DTEJD1997]

Hey all:

 

I am optimistic on NTP and I know Mr. Koo is a very capable operator...I've held shares for many years.  My family has owned shares since 1989....I used to own thousand & thousands of share and saw a huge percentage of my wealth go up in smoke when NTP turned down their Apple contracts...

 

I still think good things are ahead for NTP....

 

But $6/share in earnings?  whut WHUT?  That might be $6/share in HKD, which would translate to something like $1/share in USD.

 

If it is $6/share USD, then NTP is the cheapest stock out there...bar none.

 

I just don't see it.  Neither do those old dudes in NYC, the Kahn Brothers.  They've held the stock for a long time and they just sold a big chunk of their holdings.  Why would they sell when riches are just around the corner?

 

NTP is going to do well, but it is still going to take some time.

 

Stories of $6/usd in per share earnings are nothing more than pipe dreams...

 

[atbed]

Hey all:

 

I am optimistic on NTP and I know Mr. Koo is a very capable operator...I've held shares for many years.  My family has owned shares since 1989....I used to own thousand & thousands of share and saw a huge percentage of my wealth go up in smoke when NTP turned down their Apple contracts...

 

I still think good things are ahead for NTP....

 

But $6/share in earnings?  whut WHUT?  That might be $6/share in HKD, which would translate to something like $1/share in USD.

 

If it is $6/share USD, then NTP is the cheapest stock out there...bar none.

 

I just don't see it.  Neither do those old dudes in NYC, the Kahn Brothers.  They've held the stock for a long time and they just sold a big chunk of their holdings.  Why would they sell when riches are just around the corner?

 

NTP is going to do well, but it is still going to take some time.

 

Stories of $6/usd in per share earnings are nothing more than pipe dreams...

 

Oh boy, I remember the apple days. I feel your pain just thinking about it

 

I'm not sure how he's getting 1.5-2.0B HKD either. Maybe it is rent, very aggressive assumptions at that, and 10 years down the line. China changes much, so I guess who knows... I remember my shock when I visited Pudong in Shanghai for the second time and then the shock again on the third visit. 

 

I don't think most of us are in it for that scenario though. Assuming the gap to NAV closes down the line, $1 or 7 RMB will be enough to generate attractive returns. I personally think there is a high chance both of those happens.

 

[hillfronter83]

Hey all:

 

I am optimistic on NTP and I know Mr. Koo is a very capable operator...I've held shares for many years.  My family has owned shares since 1989....I used to own thousand & thousands of share and saw a huge percentage of my wealth go up in smoke when NTP turned down their Apple contracts...

 

I still think good things are ahead for NTP....

 

But $6/share in earnings?  whut WHUT?  That might be $6/share in HKD, which would translate to something like $1/share in USD.

 

If it is $6/share USD, then NTP is the cheapest stock out there...bar none.

 

I just don't see it.  Neither do those old dudes in NYC, the Kahn Brothers.  They've held the stock for a long time and they just sold a big chunk of their holdings.  Why would they sell when riches are just around the corner?

 

NTP is going to do well, but it is still going to take some time.

 

Stories of $6/usd in per share earnings are nothing more than pipe dreams...

 

Oh boy, I remember the apple days. I feel your pain just thinking about it

 

I'm not sure how he's getting 1.5-2.0B HKD either. Maybe it is rent, very aggressive assumptions at that, and 10 years down the line. China changes much, so I guess who knows... I remember my shock when I visited Pudong in Shanghai for the second time and then the shock again on the third visit. 

 

I don't think most of us are in it for that scenario though. Assuming the gap to NAV closes down the line, $1 or 7 RMB will be enough to generate attractive returns. I personally think there is a high chance both of those happens.

 

Koo is certainly a very successful businessman. But I'm not sure how he gets $200m annual profits from these real estate development. The total floor area under development for two projects is 684,168 square meters. Last I checked in Shenzhen A office rent is about RMB200/meter/month. So the revenue will be about $234m per year. Since I know nothing about commercial real estate management, I'd guess there will be some expenses. In addition, the estimate to build the whole thing will be about $800m. So he'll need to finance a significant portion of that. And finally, what NTP has is two piece of land with manufacturing zoning, which he need to pay a fee to convert them into commercial use (one of them might already been paid, though I'm not 100% sure).

 

That said, I think NTP can still be cheap with net cash per share around $5. But there is a lot of risk with the real estate projects. I'd rather see them build the real estate and sell or just simply sell the land. IMO GSOL is a much better bet if you like Shenzhen (or Chinese) real estate. GSOL has a profitable business on top of very attractive existing Asia real estate portfolio that are already receiving rent.