(04-03-2014, 09:31 PM)Art or Science Wrote: [ -> ]Been eyeing this stock for some months now (even though it is a s-chip) because of it's good numbers.
Nonetheless, what are the chances of the chinese government amending the laws/regulations relating to toll roads that could have a major negative impact on CMP? Any precedence of chinese government changing their regulations (besides the chinese holidays ruling?)
As in, can the chinese government impose a cap on the toll rate fee or is there a fee structure in the first place? Cant seem to find anything on this on the net..
look at the past annoucement. you will realize the Sh** has hit the fan.
(04-03-2014, 09:36 PM)Drizzt Wrote: [ -> ] (04-03-2014, 09:31 PM)Art or Science Wrote: [ -> ]Been eyeing this stock for some months now (even though it is a s-chip) because of it's good numbers.
Nonetheless, what are the chances of the chinese government amending the laws/regulations relating to toll roads that could have a major negative impact on CMP? Any precedence of chinese government changing their regulations (besides the chinese holidays ruling?)
As in, can the chinese government impose a cap on the toll rate fee or is there a fee structure in the first place? Cant seem to find anything on this on the net..
look at the past annoucement. you will realize the Sh** has hit the fan.
they announced public holidays cannot collect tolls on passenger vehicles.
(04-03-2014, 09:31 PM)Art or Science Wrote: [ -> ]Been eyeing this stock for some months now (even though it is a s-chip) because of it's good numbers.
Nonetheless, what are the chances of the chinese government amending the laws/regulations relating to toll roads that could have a major negative impact on CMP? Any precedence of chinese government changing their regulations (besides the chinese holidays ruling?)
As in, can the chinese government impose a cap on the toll rate fee or is there a fee structure in the first place? Cant seem to find anything on this on the net..
In 2012, some toll roads in Guangdong was hit by a measure to unify toll rates in the province. SGX listed MIIF held an investment in Hua Nan Expressway and it had to reduce its toll rates substantially -
https://www.macquarie.com/dafiles/Intern...SE.pdf?v=1 - you can also check the press releases by other operators like Hopewell Infrastructure (listed in SEHK) to see its impact. In CMP case, there has been no precedence of toll cuts. But recently, Guihuang Expressway announced that some toll stations will be relocated though compensation will be paid by the Government.
In short, there are regulatory risks at play here. It is something any investor have to be mindful of. Personally, I think laws in China are still not as well developed as the ones in the West so connections would still play a big role.
Hope this helps.
(Vested)
Hi Drizzt and Nick,
Thanks for the prompt reply.
Think I will not invest because of the regulatory risks.
Never know when and what the government gonna amend..
In Rome, do what the Romans do. In the middle Kingdom, just follow the right eunuchs. Try putting an angmo bull in the China shop, you will get the MIIF experience and still stuck with the wrong term China play.
If I may recall the Renong-UEM North-South Highway story that started in 1988 in Peninsular Malaysia also created a lot wealth for faithful followers. Of course, Renong-UEM is a greenfield project that created a lot of spinoffs from construction to fibre-optics and property developments. Of course, Renong-UEM hit the fences with over-gearing during the Asian Financial Crisis and the entire group had to be bailed out to form the present UEM Land.
In CM Pac's case, there are no greenfield projects as far as I can remember and projects acquired are operational ones with growing traffic or stable matured traffic flows. In addition, China is vast and naturally opportunities are aplenty alongside with risks associated with real risks of over-building.
Regulatory and corporate governance has always been a letdown in China. In as far as China Merchant Group and CM Pac, the CM Gp appears to be the Chinese State owned flagship for domestic port and toll road infrastructure projects.CM Gp has also been the leading the Chinese sovereign wealth charge for overseas infrastructure. So in terms of its profiling, they would want to minimise the potential of fraud that will tarnish its reputations (especially when Chinese are face loving people).
Personally, while we may have missed the infancy stages of incubation of CM Pac (at least over the last decade of track record building), the road ahead will definitely be smoother and faster with this new commitment. If this is the start of the long overdue consolidation of the isolated provincial based toll roads under a few pan-china toll road plays, then this could well be the start of a new theme no different to that of the water and environmental concept plays that we have witnessed in SIIC and Hankore. What is more compelling here is a proven infrastructure story with good track record of dividend payout and growth that is poised for potentially more accretive acquisitions.
I may have stretched imaginations but this is likely to be what CM Group's objective in CM Pac is likely to shape up. They have to dilute their holdings and increase the free float of CM Pac to enable CM Pac to tap the power of equity markets to part finance this growth story.
Vested
GG
(04-03-2014, 09:44 PM)Nick Wrote: [ -> ] (04-03-2014, 09:31 PM)Art or Science Wrote: [ -> ]Been eyeing this stock for some months now (even though it is a s-chip) because of it's good numbers.
Nonetheless, what are the chances of the chinese government amending the laws/regulations relating to toll roads that could have a major negative impact on CMP? Any precedence of chinese government changing their regulations (besides the chinese holidays ruling?)
As in, can the chinese government impose a cap on the toll rate fee or is there a fee structure in the first place? Cant seem to find anything on this on the net..
In 2012, some toll roads in Guangdong was hit by a measure to unify toll rates in the province. SGX listed MIIF held an investment in Hua Nan Expressway and it had to reduce its toll rates substantially - https://www.macquarie.com/dafiles/Intern...SE.pdf?v=1 - you can also check the press releases by other operators like Hopewell Infrastructure (listed in SEHK) to see its impact. In CMP case, there has been no precedence of toll cuts. But recently, Guihuang Expressway announced that some toll stations will be relocated though compensation will be paid by the Government.
In short, there are regulatory risks at play here. It is something any investor have to be mindful of. Personally, I think laws in China are still not as well developed as the ones in the West so connections would still play a big role.
Hope this helps.
(Vested)
From what I knw, MIIF was charging the toll rate at a substantially higher rate in the first place.
Lucky for cmhp shareholders, whenever there are changes, the gov always seem to make reasonable compensation for cmph. (unlike MIIF). The group gain 360m When the local governor bought over yuyao. We will still need to see how the relocation of Guihuang will pan out. Of course , risk is still unpreventable from nation wide policy (holiday free period)
Also, in terms of toll management, MIIF and cmhp are worlds apart. (IMHO).
(05-03-2014, 08:48 AM)Jack31 Wrote: [ -> ]From what I knw, MIIF was charging the toll rate at a substantially higher rate in the first place.
Lucky for cmhp shareholders, whenever there are changes, the gov always seem to make reasonable compensation for cmph. (unlike MIIF). The group gain 360m When the local governor bought over yuyao. We will still need to see how the relocation of Guihuang will pan out. Of course , risk is still unpreventable from nation wide policy (holiday free period)
Also, in terms of toll management, MIIF and cmhp are worlds apart. (IMHO).
Yes, you are right in that MIIF toll rates are substantially higher and they are paying the price for it. In addition according to the CMP CEO words, Guangdong province toll road policies are rather messy and it will be quite some time before they even think of investing toll roads in GD.
as for the compensation part, this is where investing with the right connections is very important in china. PRC govt has 2 different sets of rules, one for foreigners and one for locals.
MIIF is an investor and they really don't know nuts about running toll roads whereas CMP specialised in toll road operations and know the local rules much better. CMP also has a big sponsor(CM group, including banks) behind to provide the deep pockets and cheap funding. a better comparison for cmp will be those toll road operators listed in HK. cmp is small in comparison and wants to get there in doubly quick time with this re-structuring.
(05-03-2014, 08:48 AM)Jack31 Wrote: [ -> ]From what I knw, MIIF was charging the toll rate at a substantially higher rate in the first place.
Lucky for cmhp shareholders, whenever there are changes, the gov always seem to make reasonable compensation for cmph. (unlike MIIF). The group gain 360m When the local governor bought over yuyao. We will still need to see how the relocation of Guihuang will pan out. Of course , risk is still unpreventable from nation wide policy (holiday free period)
Also, in terms of toll management, MIIF and cmhp are worlds apart. (IMHO).
to be fair if i remember Shenzhen expressway is in the same situation and you can see the compensation they gotten seem to be much fatter. so that puts into perspecive that CMHP perhaps didnt get as high of a deal.
Finally, conversion of the bonds
http://infopub.sgx.com/FileOpen/Cancella...eID=289580
Slight dilution impact on the existing shareholders. With the things that happened since beginning of year, surprise hike in dividend, new CEO, conversion of bonds.... the story is getting more and more interesting. Hope they would announce another acquisition soon.
(02-04-2014, 06:28 PM)valuebuddies Wrote: [ -> ]Finally, conversion of the bonds
http://infopub.sgx.com/FileOpen/Cancella...eID=289580
Slight dilution impact on the existing shareholders. With the things that happened since beginning of year, surprise hike in dividend, new CEO, conversion of bonds.... the story is getting more and more interesting. Hope they would announce another acquisition soon.
Note that only $1 million (out of $1.16 billion) was converted. Wonder will we see more conversion before it XD ?
(Vested)