1189.HK - Rosedale Hotel Holdings

[rukawa]

Came up on a screen I do for net-nets. Hotel owner in Hong Kong which is extremely cheap off weakness in tourism industry.

Financials (HKD millions)

NCAV = Current assets - total liabilities =  1908 - 181=1727 (basically pure cash)

Market Cap = 0.56 * 789 M shares = 442 = 26% of NCAV

 

So its basically ultra ultra cheap. I can't see any real hair but its so cheap that I'm pretty sure I'm missing something huge. The hotels themselves seem to have an ok rating online. Maybe I'm reading the Financial statements wrong.

 

They have a lot of subsidiaries doing all kinds of different things which bothers me. Their large cash holding appears in their consolidated statements of financial position but not in their company statement of financial position so I know the cash is held in their subsidiaries.

[Green King]

They can fake cash if they want to. But no point here since they don't seem to care about their stock price. In HK the Cash is there to hedge businesses risk. have you looked into that jump in cash in 2014? There are many of those out there last time I checked. It could be a good basket play once in five years something might happen.

[NeverLoseMoney]

One thing that seems very fishy to me is their share placing in June, 2015.

 

From the annual report 2015:

On 8 June 2015, the Company completed a placing of 131,535,174 new shares under the general mandate at a placing price of HK$0.89 per placing share. The net proceeds from the placing, after deducting directly attributable cost of HK$3.05 million, were approximately HK$114 million.

 

I think this was right around the time that many small Hong Kong listed stocks saw a speculative increase in their stock prices. This company took advantage of the spike in their stock and issued a significant amount of stock at a huge discount to book value. Why?

 

This is what the company said about this in a filing of May 26, 2015:

 

The Directors are of the view that the Placing will enlarge the shareholder base and the capital base of the Company. In addition, the net proceeds of the Placing will strengthen the financial position of the Group. Accordingly, they consider that the Placing is in the interests of the Company and the Shareholders as a whole.

 

That makes no sense to me. They were sitting on a very large amount of cash already. And why is "enlarging the shareholder base" a goal?

 

This is one of those companies that has operations in China and that seems to have raised more cash from investors than it has returned to them, all while sitting on a large cash balance. I avoid those like the plague.

[serendibz]

Don't bother. The cash may be real but:

 

1. they pay 0 dividends

2. their NAV per share has actually declined over the years so they are value destroying

3. they are a perpetual net-net

4. chairman allan yap heads a few other listed companies and doesn't have a history of being shareholder friendly

[rukawa]

Don't bother. The cash may be real but:

 

1. they pay 0 dividends

2. their NAV per share has actually declined over the years so they are value destroying

3. they are a perpetual net-net

4. chairman allan yap heads a few other listed companies and doesn't have a history of being shareholder friendly

 

Yes the zero dividend makes no sense. As does the still increasing share count even though they have so much cash.

[johnny]

well this is obviously a fraud so i expect 100 pages in this thread by 2018

[Nnejad]

Ha

[Green King]

well this is obviously a fraud so i expect 100 pages in this thread by 2018

 

+1 50/50 This will be the next Sun Edison.

;)