Monday 11 February 2019

Wai Kee Holdings

Founded in 1970, the Hong Kong based Wai Kee Holdings (WKH) Limited has a well-established presence in the construction and infrastructure industries.Wai Kee Group has operations in the following areas: 
- Toll Road
- Property development 
- Construction
- Construction Materials 
- Quarrying




90% of WKH revenue comes from Road King and 90+% of Road King revenue comes from property development. Hence WKH is actually a property counter. WKH current share price is $4.40, trading at about 0.5x NAV. Does that consider undervalue? We know that most Singapore property developer or construction counters are trading below book too.

Undervalue
From the latest interim Report, WKH owns 41.94% of Road King and 56.33% of Build King.
Looking at sum of parts, WKH is worth at least $6.96. That is a further 52% gain with a current yield of 6.8%


 
In terms of PE ratio, it is range between 3.7x to 4.7x, the median is 4.3x. At the current 3.1x, there is potential for 50% upside.


Performance
Business is doing well, revenue increasing every year at 11% CAGR, although 90% of the revenue came from Road King. Quick ratio is above 1, WKH will be relatively safe and tie through any down turn.


Dividend payout is at 23% - 24% for the last few years. TTM EPS is $1.43, at 23% payout, dividend per share is 32.89 cents which give a forward yield of 7.48% at a share price of $4.40.

Free Cash Flow (FCF) = Net Profit - CAPEX 
Adjusted FCF = Net Profit + Non-Cash items + Borrowings - CAPEX

Conclusion
With the stock price worth lesser than the entities WKH is holding in its books, I just have to buy hold and wait for the price to correct to its intrinsic value. While waiting, I will be enjoying the nice dividend and the further growth of the business.

0 comments:

Post a Comment

Powered by Blogger.