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Is Uni-Asia a good buy at Current Price level
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Alignment
Master |
09-Jun-2024 17:43
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It' s probably not as easy as that. The share price implies a material negative value for the property business if you take (what I think is) a reasonable view for the shipping business. That may partly just be the market materially undervaluing the shipping busines. Alternatively/additionally, the market may be assuming the company makes further bad investments in HK property, an assumption that may be hard to disprove unless the company takes a more active stance to do so. |
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MrBear12
Supreme |
19-May-2024 23:15
Yells: "Peace and goodwill to all" |
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We may just discount those property stakes when we value this guy. Value its main business, I mean. Good to see you back, Alignment. You are our chief valuer. Always travelling. My turn this week.
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Alignment
Master |
19-May-2024 22:46
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This is all true. But the analysis is complicated by the fact that the company also has these HK commerical property minority stakes which are difficult to value, especiallty given the state of this market. As I said previously, it would have been better if the company had the foresight to exit these stakes much earlier. The share price would then be a lot higher than it is now. |
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Rightstock
Senior |
17-May-2024 15:04
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Samudera share price has benefited from the increase in freight rate for container shipping. People has been wondering beside Samudera is there another SGX stock in the shipping business. Uni-Asia is in dry bulk shipping and freight rate is also going up. |
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Alignment
Master |
09-Apr-2024 15:48
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Surely it should be valued primarily as a shipping company. | ||||
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Joelton
Supreme |
28-Mar-2024 10:32
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SAC Capital keeps &lsquo buy&rsquo on Uni-Asia, revises target price to $1.02
Uni-Asia Group' s results looks to normalise in FY2024 and beyond following FY2022' s port build up-fuelled boom.
SAC Capital analyst Matthias Chan is maintaining his &ldquo buy&rdquo call on Uni-Asia Group CHJ 2.01% with an unchanged target price of $1.02 as the group&rsquo s weaker FY2023 ended Dec 31, 2023, points towards a &ldquo normalising&rdquo of the shipping industry following its &ldquo unprecedented boom&rdquo from chronic port congestion globally in FY2022.
For the FY2023, Uni-Asia&rsquo s net profit came in 82% lower y-o-y at $5.1 million, while revenue dropped 33% y-o-y to $58 million.
The Baltic Handysize Index (BHSI), a leading indicator of economic activity of spot freight earnings for smaller dry bulk vessels, is currently trading close to US$800 ($1,078.16), close to the US$831 high in December 2023 and more than double the trough recorded in August last year.
Chan notes that macroeconomic conditions suggest that rates &ldquo will hover&rdquo at current levels, with a probable upside.
&ldquo Chinese seaborne dry bulk imports, especially coal, which makes up a third of global imports, remain robust. Rerouting of trade flows on longer voyages via the Cape of Good Hope has increased travel by more than a week. The long-standing slow steaming regulations to reduce harmful gas emissions also support rates,&rdquo writes the analyst.
Chan also understands Uni-Asia is active in managing its fleet to optimise returns, which he remarks as being similar to an investment manager.
He explains: &ldquo It has successfully divested two old ships recently to meaningfully reduce the blended age of its portfolio of ships for optimal charter rates. In addition, the sales managed to be net book value neutral/positive and generate positive cash flows.&rdquo
Similarly, the group&rsquo s properties in Hong Kong and Japan are actively managed to optimise returns, such as in the case of several of its Hong Kong property assets currently being put on the market for strata-titled sales.
Beyond this, Chan writes that Uni-Asia is &ldquo not just&rdquo an alternative investment manager, noting that the group&rsquo s asset management arm, Uni-Asia Capital Japan (UNCJ), has increased its assets under management (AUM) by nearly seven times to JPY38.7 billion ($343.8 million).
Besides holding hospitality, residential and healthcare assets, he adds UNCJ is also invested in sustainability assets, pointing to its managing of JPY1.3 billion in solar power assets since 3QFY2023 and its plans to build a public use facility comprising of a fitness centre, park, pool and bathhouse utilising residual heat from an existing waste treatment plant in Saitama Prefecture. The private finance initiative (PFI) will be UNCJ&rsquo s second.
&ldquo This is in line with the company&rsquo s commitment to good corporate citizenship and sustainable business practices, while contributing back to society,&rdquo adds Chan.
Moving forward, the analyst expects Uni-Asia&rsquo s profitability to improve from FY2023, anticipating a 60% y-o-y net profit increase in FY2024 and a further 35% y-o-y improvement in FY2025.
His revised target price implies a &ldquo fair&rdquo price-to-book value ratio (P/BV) of 0.4 times, and reflects a 60% discount to the P/BV of listed global asset managers.
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Alignment
Master |
13-Mar-2024 14:59
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No one to my knowledge is suggesting they split. This is just something in your head. What I am suggesting they should have done is not enter into their HK property investments (which are minoirty stake acquisitions) in the first place.Too late however, they are stuck with them now. They should come up with a plan to exit them at a combination of the quickest possible time at the best possible price, and never make any more investments in this space. |
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cmengchan
Senior |
13-Mar-2024 09:37
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Just a correction, Hotel was disposed for nominal amount of USD138, not $1. For FY18, based on the chart, Hotel Income was about 50% of the revenue.
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cmengchan
Senior |
13-Mar-2024 09:21
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I don' t think splitting the company to Shipping and Property makes sense at this point. The company is still too small. Splitting means you need enough people to run 2 separate companies, such as 2 sets of HR, IT, Finance, CEO, CFO, etc. For now, the same set of resources are covering 2 sets of activites. Moreover, I don' t think there is a sufficient investors that are interested in 2 distinct sets of business. I see Uni-Asia as similar to CapitalLandInvest that manages REITs. They own or co-own assets (property, shipping) and provide services that generate recurring income. Below is taken from Uni-Asia website that describe what they do. CapitalLandInvest has similar business model, but focus on property management, and they raise/manage funds that invest in properties, earn fees. In fact, their 2019 Annual report has a nice graph that breaks out the Recurring and Non-Recurring Income (included the Hotel business at that timme). The Recurring Income is was approx 90% in 2018. https://uniasia.listedcompany.com/newsroom/20190411_083727_CHJ_2S8GAWK53VPUNGYD.1.pdf Until Uni-Asia achieves a certain level of scale, splitting does not make sense. Moreover, I believe they are applying the same model to Hotel management in Japan, but unfortunately, they wrote-down and sold their hotel business for a token $1 during the pandemic so that it reduces on-going expenses at that point in time. UNI-ASIA... AN INTEGRATED SERVICE PROVIDER RELATING TO ALTERNATIVE INVESTMENTS
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czmczmczm
Member |
08-Mar-2024 12:24
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Oh i see, so its more of expectations (and no of shares outstanding) rather than underlying fundamentals, thanks! | ||||
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Alignment
Master |
08-Mar-2024 11:44
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This is a small company so it does not take a lot to move the share price. | ||||
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cmengchan
Senior |
08-Mar-2024 11:06
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I think some were expecting similar dividends as previous year which was an exception, so disappointed and sold.
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czmczmczm
Member |
07-Mar-2024 21:52
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Any idea why share price has been dropping? | ||||
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Alignment
Master |
03-Mar-2024 23:05
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My other issue is with their cash management. They have some gross debt, and some gross cash, such that net debt is relatively small. However they are paying quite a high interest rate on their debt, and earning practically zero interest income on their cash. Why? Especially when their debt is secured. If they really can' t do better in closing the gap between the interest rate they are paying and the interest rate they are receiving they should just pay down the debt with their cash (subject to what is needed for WC, which is clearly less than what they are holding). |
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Alignment
Master |
02-Mar-2024 22:23
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I don' t disagree that diversification is good. Although I would argue that diversification should be done by the investor (say by buying two separate shares, one in a shipping company and one in a property company) unless the company has a particular expertise in doing what it does. Uni-Asia clearly has expertise in shipping. It also has expertise in Japanese property development (specifically in redeveloping old houses into new flats). But I question whether it has expertise in HK commercial property. Buying small minority stakes in HK property developments does not to me indicate any degree of edge (in contrast it controls its Japanese development projects which it replicates cookie cutter style). It is also my personal view that it was obvious many years ago HK commercial property was turning, and anyone sharp would have realised this and reduced exposure early. |
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cmengchan
Senior |
02-Mar-2024 21:42
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If I remembered correctly, UniAsia was doing well for HK properties before the pandamic. However, during the start of pandamic when all travel stopped, they had to sell off their Japan Hotel Biz (for token $1) otherwise they will incurr more losses with ongoing expenses while borders were closed. I think the HK properties are joint ventures where UniAsia holds minority equity stakes, but I think reasonable assumption is that HK properties will recover. I think its good that UniAsia has a portfolio of biz that doesn' t go up or down in the same cycles. There are times when shipping is bad too. They also have exposure to Japan properties development too, but its sad that they no longer have the Japan hotel biz segment anymore. Anyway, I rather UniAsia have a mix of biz which can reduce the impact of downturn in a specific segment.
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Alignment
Master |
02-Mar-2024 21:25
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Looking at the FY results just announced, it is unfortunate that the signs of recovery in its shipping business has been obscured by the performance of its HK property investments. They really should not have been investing in HK commercial property in the way that they did. They did not seem to have any edge at all, unlike what they do in Japan. The market was turning years ago, and they should have reacted earlier if they were smarter. That said, when you take the HK properties out of the business, the remaining parts look strong. Selling the two oldest ships at a material premium to book value highlights how cheap the stock is, trading at only 0.3x book value. |
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Alignment
Master |
05-Oct-2023 18:48
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Hmm... Baltic Handysize Index has recovered somewhat - explains the support to the share price. | ||||
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Alignment
Master |
06-Sep-2023 21:34
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Question is - do you believe the book value? |
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Joelton
Supreme |
04-Sep-2023 13:12
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Citing big discount to book, SAC Capital maintains ' buy' on Uni-Asia
Lower shipping charter rates, coupled with a weak property of Hong Kong are causing an overhang to persist over Uni-Asia Group.
Nonetheless, with the share price of the investment firm hovering at a wide discount to its peers, and an even wider gap to its book value, SAC Capital analysts Nicole Lim and Matthias Chan are upbeat that there' s room for the share price to head up.
As at June 30, Uni-Asia' s NAV was US$1.89, implying a price to book ratio of just 0.36x, versus a sector average of 0.92x. The 60% discount, in the words of Lim and Chan in their Aug 30 note, is " too wide" considering the " high quality of its real assets recorded at values significantly below those of the market."
According to the analysts, charter rates are likely to remain weak in the current 2HFY2023 ending December.
This follows a 74% y-o-y drop in 1HFY2023 earnings to US$4.3 million, as average charter rates in the second quarter of 2023 dropped 13% over 1Q to US$10,800 per day.
Uni-Asia' s management is guiding for a blended spot rate of US$10,000 to US$15,000 for 2HFY2023 before recovery in the coming FY2024, led by the recovery in external demand.
As such, Lim and Chan have cut their FY2023 and FY2024 earnings estimates to US$8.3 million and US$11.3 million.
However, the analysts point out that Uni-Asia has the flexiblity to sell some of its ships, and use the proceeds to pare debt.
The price in May for a 38-40kDWT new build price stands at US$30 million, almost on par with a 5-year-old 38kDWT price of U$26 million, signaling price resilience despite falling charter rates.
" Purchase of second-hand vessels still remain an attractive option," write Lim and Chan.
Uni-Asia has taken a series of minority stakes in small commercial developments in Hong Kong as well. However, the city suffering spillover from the broader slowdown in China.
" Conservatively, the company does not expect contributions from Hong Kong property projects in 2H23 and 1H24," the analysts say.
On the other hand, Uni-Asia sees further expansion in Japan.
After its first successful co-purchase of land outside Tokyo, it is considering similar acquisitions with other investors in Furano and Niseko, the analysts note.
" We maintain a buy recommendation at revised target price of $1.14, down from $1.20 previously," note Lim and Chan, who have inputted a valuation of 0.45x book, using a smaller discount of 50%.
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