Entered C C Land Holdings Limited (HKG:1224)

C C Land is a real estate company based and listed in Hong Kong. The share is trading at P/B of 0.43 and P/NCAV 0.62. The company assets are mainly cash after they divested various holdings.

C C Land has a large market cap of 5.5 bn HK$. Large net-nets are said to perform worse than small-cap companies, however I still found this position good enough. This is mainly due to the company is trying to acquire the Leadenhall Building in London, one of the few skyscrapers in the city.  It seems there is a reasonable chance the asset discount will decrease with such a major and prolific change in business direction.

The company can fund almost the entire purchase with net-cash, but will also make a complementary rights issue. The transaction is not without risk, as they are paying a large premium to the buildings cost (it was completed in 2014).

 

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2 thoughts on “Entered C C Land Holdings Limited (HKG:1224)”

  1. A bit skeptical of Cheung Chung Kiu, he’s crafty. Not sure if the right issue was hostile, but I think it was a show of poor capital allocation, they have ample cash and could borrow for just over 1% from the banks while shareholders have much higher cost of capital.

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    1. Thanks for the insight.

      Trawling through the HK net-nets this stood out as an OK bet. I agree that capital allocation is not great. Still, the company is trading at a large discount to liquid assets. Also, management of most net-net makes horrible investment decisions – in that regard the purchase of the Leadenhall Building does at least seem as a fairly reasonable move.

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