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Tuesday, June 9, 2015

Wai Kee Holding: Asset valuation

Wai Kee Holdings is listed in HKEX with a stock code of 610. The group has some subsidiaries and associates who are also listed in the respective stock exchange. 

The group owns 39.82% of Road King Infrastructure. Road King Infrastructure invested in a toll road portfolio of approximately HKD4.2 bil, comprising 12 major toll road projects in seven provinces in PRC. For the few years, Road King kept dispose Class I/II highway projects and focuses on expressway projects which able to give higher returns.

Road King also involved in property development with land reserve of about 4.5 million sqm across 9 provinces in PRC at 2014. 

The group also owns 51.17% equity interest in Build King Holdings which offer civil engineering, buildings and environmental to both private and public sectors in Hong Kong. 

And lastly, the group also owns 94.05% equity interest in its construction materials segment which manufacture and sell concrete and quarrying products. 

The group's businesses are quite related to each other. From Construction Materials to Construction and to Property Development. Toll road provides steady cash flow to the group. 

As at today, 

Market capitalization for Road King Infrastructure: HKD5.549 billion. 
Wai Kee Holding's ownership worth: 39.82% x HKD5.549 billion = HKD2.209 billion

Market capitalization for Build King Holdings: HKD0.577 billion
Wai Kee Holding's ownership worth: 51.17% x HKD0.577 billion = HKD0.295 billion

Market capitalization for Wai Kee Holdings: HKD2.3 billion

Wai Kee Holdings's ownership in both Road King Infrastructure and Build King Holdings combined is more than its current own market capitalization. 

Sounds interesting .. 

So it almost means that you will get the Construction Materials segment for free if you buy Wai Kee Holdings now. 

But bear in mind that the bulk of it was contributed by Road King Infrastructure.In FY2014, share of profit from associates (Road King) contributed around 75% of Wai Kee's net profit. So, the group's performance is highly depends on Road King Infrastructure

Below is some of the details regarding Wai Kee Holdings currently, 

PE Ratio: 4.2
P/B Ratio: 0.4
DY: 5.69%
Net cash position

So, perhaps it worth a look further? 

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