31-05-2024, 01:18 PM
(31-05-2024, 11:37 AM)weijian Wrote: hi CY09,
Boss would actually be deemed more generous if they hadn't retained the capital within the company to buy properties. In general, unless there are past or future indications of "resource conversion", else I would regard companies holding "investment properties" that don't have a chance to convert to PPE, as "red flags".
Hi weijian,
I beg to differ with you here. Why companies holding investment properties are considered as "red flags"? Most companies in construction and property development businesses know that their earnings are lumpy. Some have decided to hold some investment properties for yearly recurring income to smooth out the volatility. There is nothing wrong with that. What is worrying is that they might overpaid/over geared for those assets in their balance sheet, in the name of having a recurring income stream.
I don't see KSH having a over geared balance sheet currently, despite their losses in the construction segment. In fact, revenue should be coming in from sales of completed development projects in PRC. I see it as a potential turnaround play.