Monthly Archives: August 2016

Ming Fai announces sale of investment property

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Ming Fai announced today that the company sold their investment property in Hong Kong for a consideration of HK$263 million. These properties were valued at HK$198 million as at December 31, so this is pretty good news. It’s however not unexpected news. On the 31st of May this year Ming Fai already announced that they were looking to sell the property, and on the 1st of August they signed a letter of intent to sell the property for HK$263 million.

What will be done with the cash that is generated with the sale remains an open question for now. I like that they have sold an investment property that has nothing to do with their main business: the manufacturing and distribution of amenity products. But based on the following language I don’t expect that a lot of capital will be returned to shareholders soon. This is unfortunate since Ming Fai’s history of investing outside their core-business is a bit spotty.

The net proceeds to be received by the Vendor from the Disposal will improve the overall cash position of the Group for general working capital purpose as well as for future opportunities that may arise

While the stock price is up roughly 13% since the company announced the signing of the letter of intent I think Ming Fai is still very attractive today. If I update my valuation model of Ming Fai for the HK$263 million sale price I get the following picture (with a HK$1.04 stock price):

Ming Fai valuation based on updated property price

Disclosure

Author is long 3828.HK

Elliott Associates completes tender offers for QFAL and QFID

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Elliott Associates announced today that it would accept all shares that were tendered in the offers launched for Fondo Alpha and Immobiliare Dinamico, despite getting less than 50% of the outstanding shares of the two fonds. The tender offer for Fondo Alpha was the biggest success, and Elliott Associates managed to acquire 24.8% of the outstanding shares for a total consideration of €33.5 million. In the Immobiliare Dinamico offer just 2.5% of the outstanding shares were tendered for a total value of €2.8 million, but together with open market purchases they managed to get a total stake of 4.9%. In the offer for the Polis fund that closed a month earlier they acquired 16% of the outstanding shares. I didn’t sell my shares in the offer, and based on today’s market reaction that seems to have been a good choice. Fondo Alpha is now trading 3% above Elliott’s offer while Immobiliare Dinamico is trading 0.2% above the offer.

Promotional material from the Fondo Alpha offer

Disclosure

Author is long QFAL.MI and QFID.MI

Beximco Pharmaceuticals starts exporting to the US

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Beximco Pharma released a press release this morning announcing that the company is the first firm in Bangladesh to start exporting generic pharmaceutical products to the United States. This news was some time in the making since Beximco Pharma, also as a Bangladeshi first, already received US FDA approval one year ago. Apparently the launch was a big event in Bangladesh, with multiple newspapers reporting on it, and with a ceremony that was attended by the Finance Minister of Bangladesh and the US Ambassador in Dhaka.

I don’t expect that this launch will have a major impact on the profitability of the company in the near term, but since the US is a huge market and Bangladesh a very cheap producer of generic pharmaceutical products it could become a sizable growth factor. I’m not really in this stock because of the growth potential, but it’s nice that it’s there. While the stock is up 12.8% at the time of writing this post the London GDRs are still trading at an almost 60% discount compared to the price of the ordinary shares in Dhaka. There is no catalyst in sight for this to change, but I think that the GDRs are simply too cheap not to own and in the meantime we get paid a reasonable dividend that doesn’t have any discount.

Beximco Carvedilol US launch ceremony

Disclosure

Author is long Beximco Pharma