If you sum up all operational cash in flows for last 10 years, they barely cover all the capex outflow for last 10 years. At the same time, the debt has grown by 4.1B HK$ which looks like to be the main source of dividends. Makes me wonder if the company is actually making any money? Am I missing somenthing ?
Great write up- thank you! I was planning to look at them too but probably cant wait for a while, not sure what a catalyst here would be. That said ofc the bus depot for redevelopment is a great boon, had a good time with telephone exchanges being redeveloped back in the day, this seems similar, but again the question is how soon and is there a natural limit to doing 1 every X years coz SKH can only go so fast.
There are 4 owned plots of land (and 2 rented from government) recognised as 'Major Depots serving KMB' in the annual reports. There's also one more listed under investment properties as 'Tuen Mun Town Lot No.80 1 Kin Fung Circuit' because it's rented to HKTVMall, a third party and not used as a depot any more. That one has received redevelopment permission so it will be the next development.
That is actually previously part of the actively used Tuen Mun Depot (if you go on Google Maps its literally just across the road), but they decided to split it into two properties rather than redevelop the whole thing in a larger development and rent another plot from the government.
If you sum up all operational cash in flows for last 10 years, they barely cover all the capex outflow for last 10 years. At the same time, the debt has grown by 4.1B HK$ which looks like to be the main source of dividends. Makes me wonder if the company is actually making any money? Am I missing somenthing ?
The property side paid half of the land premium/construction contracts, i.e. ~4.4bn growth capex from 2016-2023 for the Millenity.
Existing properties over the last 10 years generated 400/500m FCF
The bus biz over the last 10 years did ~5bn FCF, those get you to ~1bn total FCF over the last 10 years
I personally view it as the bus biz funds divs, then they levered up to pay for the property development.
Great write up- thank you! I was planning to look at them too but probably cant wait for a while, not sure what a catalyst here would be. That said ofc the bus depot for redevelopment is a great boon, had a good time with telephone exchanges being redeveloped back in the day, this seems similar, but again the question is how soon and is there a natural limit to doing 1 every X years coz SKH can only go so fast.
Congratulations, it is very difficult to get clear information from this company. PD: I think they have only 4 bus depots in property ¿Could be?
There are 4 owned plots of land (and 2 rented from government) recognised as 'Major Depots serving KMB' in the annual reports. There's also one more listed under investment properties as 'Tuen Mun Town Lot No.80 1 Kin Fung Circuit' because it's rented to HKTVMall, a third party and not used as a depot any more. That one has received redevelopment permission so it will be the next development.
That is actually previously part of the actively used Tuen Mun Depot (if you go on Google Maps its literally just across the road), but they decided to split it into two properties rather than redevelop the whole thing in a larger development and rent another plot from the government.