一百萬元基金倉

Wednesday, September 15, 2010

永恒策略 (764.HK)

One extremely speculative idea:  Buy 永恒策略 (764.HK) at $0.38.
  • Core businesses are provision of management services to casinos in Macau and property development.
  • HK$644MM in cash and HK$55MM in debt.
  • HK1,098MM in Tangible Book Value vs. HK$87MM in market cap currently (if you look at Yahoo Finance or Google Finance, you'll see market cap is HK$418MM but that's not the right figure because the company just announced a 1-for-3 share subscription for existing shareholders, and HK$418MM market cap reflects the theoretical market cap after the new share issuance assuming that everybody exercised their rights.  So for now, the proper Price-to-Tangible Book ratio should be calculated with HK$1,098MM and HK$87MM, and should be only 0.1x).
  • HK$0.03 per share in interim dividend (ex-dividend date is Oct 15 and payable date is Nov 1 so you can still buy now and enjoy the dividends), so 8% dividend yield with just interim dividend.  If the company pays out another HK$0.03, then annual dividend yield would be 16%!  The company should have the ability (though not sure about the management's willingness) to do that, given that large pile of cash sitting on the balance sheet, assuming that their accounts are not fictitious.
Though you should note that this stock is considered by some to be a 莊家股.  There's limited visibility on the intent of the management, and how business will do going forward.  My recommendation here is not based on value investment philosophy but that of a speculative one.  So I would only suggest this stock to those people who are speculative in their investment style and are prepared to lose money.