30-11-2015, 10:00 AM
(30-11-2015, 09:39 AM)GFG Wrote: [ -> ](29-11-2015, 11:29 PM)cif5000 Wrote: [ -> ](29-11-2015, 01:01 AM)GFG Wrote: [ -> ]If you believe the entire Dalian project will go to hell, all those physical commercial properties are not going to be worth the loans taken out to build them, and the associate will become insolvent and KW will be chased by creditors and will have to pay up, (it doesn't matter how much is the exact proportion of the liability), then of course you can forget about the RNAV calculation above. the entire 60mil+ liability would be like 17 cents in book value alone. In such a doomsday situation, more than half of the NTA of KW will be annihilated.
If you think the Dalian project will eventually be worth something other than $0 or -ve, the associate wont go belly up, then at current valuations it is certainly still attractive. Based on the terrible scenario highlighted above, the RNAV is still slightly higher than current price.
I'm glad that you have come to realize that the worst case scenario for the Dalian Project is not simply a write-off and assigning a $0 value to it. That was exactly the point I wanted to make.
Since KW has a foot (or more) into property development, it would only be fair to compare it with other property stocks. Many are trading below RNAV or even NTA, with stronger balance sheets and clearer development projects.
Thanks for pointing the liabilities out, but as I mentioned earlier, of the 2 groups, I belong to the latter where I don't think it's a doomsday scenario for KW.
In the latter scenario, even a complete write off to $0, plus a further write down of china investment properties (unrelated to DSC), still makes it worthwhile based on valuations. (you can also start analysing earnings/quality of earnings etc but that's another story there again)
Sure, if it's the 1st scenario, then KW is screwed. But that can be said of almost any investment. (eg. if oil goes to $10 and stays there, many many O&G are dead too). The key qn is an assessment of the risk/reward ratio.
In fact, IMHO, as soon as 2016 (FY17), KW's BS will improve substantially. DSC will still do poorly (management guided for 2 yrs for phases 8 and 9), but proportionally, DSC is not that significant after the writedowns. The bulk of the capital intensive projects (Skywoods, Starlight and worker's dorm) will TOP/be operational in 2016 (FY17) and start paying down the receivables once they are cashflow positive.
The time to be bearish (on hindsight) for KW should be 2-3 quarters ago, just before the writedown of DSC, not now.
It is now unclear to me the outcome of the DSC investment for KWC. The property value is unlikely to go to zero although it may be depressed. Can record as profit or loss and that's accounting matter but the problem is no real cash inflow contribution from DSC expected for at least the next 2-3 years. Qn is will there be more cash outflow for DSC from KWC? Can someone remind me of that?
Turning local, Skywood sale is still respectable but Starlight Suite is a concern.
KTI is hovering ard the 8 baht range. Doesn't seems to matter much.