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):
Author is long 3828.HK