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09-09-2014, 06:02 PM
CMP - Pains of Growing The Dragon
CMP management re-iterated that parent company China Merchant Huajian has chosen CMP as the platform for future growth.
It has to be noted that China Merchant Huajian is no new to the listed and unlisted toll road sector in China and HKSE.
For Huajian to have arrived at this mandate within a largely central planning economy is of significance. Huajian would have easily chosen other listed and established toll operators as their vehicle for future consolidation and expansion and there is really no need to waste their time and energy with CMP. However, given their mandate, CMP has got little choice but to grow. So far the growth is within a controlled path - share price tracking dividend growth with little yield compression detected as yet.
I remember in a 2011 Edge article interview with Jiang Yan Fei, Huajian needs to grow CMP to a S$6bn mkt cap (HK$36bn) before a listing is considered feasible in the light of the listed comparables on HKSE. Since the YTW and Beilun acquisitions and the latest being the revived Jiurui Expressway (being cheaper,less indebtedness and longer toll collection duration) speak so much of the management focus and commitment to ensure that CMP is on track for the target. The growth in market cap in my opinion will come from both organic growth of its fast expanding portfolio and via inorganic avenue such as acquisitions. The current credit crunch environment has presented financially sound companies like CMP to assume leadership in the consolidation.
CMP's rich dividend yield is a strong enough selling point for investors looking for cashflows and steady capital appreciation (hopefully via yield compression over time when investors are convinced of their ability to deliver). To add to that, parent Huajian has been generous with minorities even though they have been leaving their dividends with CMP as payables over the last few years.
When everyone is hunting high and low for S-Chips, I simply cannot believe that no many are convinced by a track record that is 1 decade old and are still hunting high and low for S-Chips. To me, the rest are expired and poisonous chips. CMP is well and truely the only S-Chip left for dividend hunters but its sitting there available for a song with plenty of skepticism.
Huajian is part of a well regarded SOE China Merchant Group in China. CMG is the leading China SOE flag bearer that is acquiring infrastructure assets globally. If funny things can happen here at CMG, I am more than willing to take risks with my money.
Noone likes 7.5% yield with 5% capital growth. Everyone (including SWFs) will love a winner with 5% yield alongside with iffy 7.5% capital growth. When to buy will be your choice since I have already cast my votes.
Core Holdings
GG
CMP management re-iterated that parent company China Merchant Huajian has chosen CMP as the platform for future growth.
It has to be noted that China Merchant Huajian is no new to the listed and unlisted toll road sector in China and HKSE.
For Huajian to have arrived at this mandate within a largely central planning economy is of significance. Huajian would have easily chosen other listed and established toll operators as their vehicle for future consolidation and expansion and there is really no need to waste their time and energy with CMP. However, given their mandate, CMP has got little choice but to grow. So far the growth is within a controlled path - share price tracking dividend growth with little yield compression detected as yet.
I remember in a 2011 Edge article interview with Jiang Yan Fei, Huajian needs to grow CMP to a S$6bn mkt cap (HK$36bn) before a listing is considered feasible in the light of the listed comparables on HKSE. Since the YTW and Beilun acquisitions and the latest being the revived Jiurui Expressway (being cheaper,less indebtedness and longer toll collection duration) speak so much of the management focus and commitment to ensure that CMP is on track for the target. The growth in market cap in my opinion will come from both organic growth of its fast expanding portfolio and via inorganic avenue such as acquisitions. The current credit crunch environment has presented financially sound companies like CMP to assume leadership in the consolidation.
CMP's rich dividend yield is a strong enough selling point for investors looking for cashflows and steady capital appreciation (hopefully via yield compression over time when investors are convinced of their ability to deliver). To add to that, parent Huajian has been generous with minorities even though they have been leaving their dividends with CMP as payables over the last few years.
When everyone is hunting high and low for S-Chips, I simply cannot believe that no many are convinced by a track record that is 1 decade old and are still hunting high and low for S-Chips. To me, the rest are expired and poisonous chips. CMP is well and truely the only S-Chip left for dividend hunters but its sitting there available for a song with plenty of skepticism.
Huajian is part of a well regarded SOE China Merchant Group in China. CMG is the leading China SOE flag bearer that is acquiring infrastructure assets globally. If funny things can happen here at CMG, I am more than willing to take risks with my money.
Noone likes 7.5% yield with 5% capital growth. Everyone (including SWFs) will love a winner with 5% yield alongside with iffy 7.5% capital growth. When to buy will be your choice since I have already cast my votes.
Core Holdings
GG