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Just to add on, I did some digging into the historical prices of Hotung Investment (adjusted for the share consolidation) and found out that over the past decade, the adjusted share price factoring in the share consolidation rose only slightly from May 2007 of around $1.35 (price adjusted for share consolidation) to current of $1.69. So, the return on market share price over a decade is only 25.2%.
The saving grace is the consistent attractive dividends dished out to shareholders every year that seems to hype up this investment. The company being cash rich also has been returning cash to its shareholders in the form of share buy-backs which still contributes to shareholders. However, this also shows that the growth in NAV, earnings per share and dividends per share over the decade could have been supported partly through share buy-outs instead of solely real solid growth in the venture capital investment businesses propelling any growth of the various financial metrics.
Overall, Hotung Investment is still an acceptable addition to one' s portfolio due to its continued share buy-backs practice and good dividends given out yearly, but do not expect too much from the total long term returns one will get from this investment unless it makes fantastic showing in its future businesses in venture capital investment which tunes up its future fortunes.
The saving grace is the consistent attractive dividends dished out to shareholders every year that seems to hype up this investment. The company being cash rich also has been returning cash to its shareholders in the form of share buy-backs which still contributes to shareholders. However, this also shows that the growth in NAV, earnings per share and dividends per share over the decade could have been supported partly through share buy-outs instead of solely real solid growth in the venture capital investment businesses propelling any growth of the various financial metrics.
Overall, Hotung Investment is still an acceptable addition to one' s portfolio due to its continued share buy-backs practice and good dividends given out yearly, but do not expect too much from the total long term returns one will get from this investment unless it makes fantastic showing in its future businesses in venture capital investment which tunes up its future fortunes.
jeremyow ( Date: 18-May-2017 12:09) Posted:
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I am getting around 10% return in dividend every year .
Hotung is a low return on equity (ROE) and low return on invested capital (ROIC) stock. Its ROEs and ROICs have both been consistently lower than 7% (average ROE for past decade around 4%). This means an investor in this stock is consistently getting average 4% returns each year on equity and invested capital held in this investment. The dividend per share is also not stable through the years, sometimes higher and sometimes lower. So, if one averages it out, the average dividend yield is not so impressive at 8% but average dividend yield for past decade is lower. Overall, I can only say this has been an average performing investment which gives average returns to an investor as compared to the media over-hype on it.
bluekelah ( Date: 18-May-2017 07:40) Posted:
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China PMI down = = slow down. hotung holdings all china and taiwan will be affected. Market down it wants to IPO any ventures also will be harder. Sell and come back for dividend next year. Nothing to see here.
n3wbie ( Date: 17-May-2017 22:47) Posted:
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valuations look compelling trading at just half of book value, not to mention the fact that it gives a dividend yield of about 8%. looks like a safe haven to flock to amidst an imminent market correction (at least as of typing right now with US indices down at least 1%).
bluekelah ( Date: 17-May-2017 22:13) Posted:
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long time sleeping stock. Why? lady boss slowly just collecting.
Now UOBKH try to push up, after XD will go back to low price again. Good dividend though.
Now UOBKH try to push up, after XD will go back to low price again. Good dividend though.
quite surprising to learn that there isn' t even a discussion on this gem.
UOBKH initiated on the stock just on Mon with a TP of $3.38. this represents a potential upside of more than 80%.
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Proxy to Tech Boom With Solid Discount And Dividend
With a solid track record of profits and dividends, HIH represents an amazing opportunity to profit from Greater China&rsquo s tech firms at 0.52x P/B through an experienced and capable manager. With strong potential for growth (fund management fee up to NT$450m), HIH is supported by insider purchases and share buybacks. A dual/re-listing in Taiwan is also possible. Initiate coverage with a BUY and S$3.38 target price based on 0.94x P/B and a 2017F dividend yield of 7.9%.
INVESTMENT HIGHLIGHTS
&bull Initiate coverage with a BUY and target price of S$3.38, based on 0.94x P/B, implying 79.1% upside. We value Hotung Investment Holdings (HIH) at S$328.9m based on 0.94x P/B, pegged to a 10% discount to its peers&rsquo average.
&bull Grand Old Dame of Taiwan&rsquo s venture capitalist scene with ~30 solid years of experience and profits. HIH boasts close to 30 years of investment experience with a leg up in deal sourcing through its rich heritage as a venture capitalist (VC) pioneer in Taiwan as well as an impressive investment team. Barring the 2008 financial crisis, HIH has built a solid track record of strong profits over the last 10 years.
&bull Growth proxy to Greater China&rsquo s tech space with exposure to the hottest tech industries. Ytd, the FTSE Taiwan tech index rose 9.9% thanks to the global tech boom. With immense investor interest in Greater China Tech and global demand for new technology forecasted to push Taiwan&rsquo s GDP growth higher, we see buoyant valuation multiples, improved earnings and ultimately greater value for HIH.
&bull Focused on exits with at least one unlock targeted yearly fund management fee income up to NT$450m. With 200 IPO listings under its belt, HIH is always on the look-out for exits and cash recycling. Management has guided a strong pipeline for 2017 and beyond and we believe that HIH should be able to execute at least one exit/value unlock every year. Meanwhile, HIH&rsquo s fund management arm has the potential to provide income of more than NT$450m p.a., a figure not inclusive of profit sharing.
&bull Generous dividend yield of 7.9% for 2017-18F with share buybacks, management purchases and solid dividends records. Over the past five years, HIH has delivered a solid dividend cumulatively averaging S$0.66/share and equivalent to a 97% payout. Backed by a pipeline of investments and exits, management has guided that this will continue and we expect a 7.9% dividend yield for 2017-18. Other than dividends, there have been share buybacks (2.24% since May 16) and insider management purchases supporting management&rsquo s confidence in HIH.
&bull Undervalued at 0.52x P/B with around half of its market cap in net cash despite consistently profitable portfolio. Despite a consistently profitable portfolio (where individual investments are typically less than 5% of total value), HIH currently trades at a deep ~45% discount to our estimated 2017F NAV of S$338.7m. Furthermore, around half of its market cap is reflected in its NT$2.14b net cash balance sheet.
&bull Potential dual listing/re-list in Taiwan. The Taiwan exchange has amended regulations that previously disallowed VCs from being listed, meaning that HIH no longer has to tolerate depressed SGX valuations. With its strong reputation in Taiwan, we opine that there is a high chance that HIH may choose to dual list/re-list there.
UOBKH initiated on the stock just on Mon with a TP of $3.38. this represents a potential upside of more than 80%.
----------------
Proxy to Tech Boom With Solid Discount And Dividend
With a solid track record of profits and dividends, HIH represents an amazing opportunity to profit from Greater China&rsquo s tech firms at 0.52x P/B through an experienced and capable manager. With strong potential for growth (fund management fee up to NT$450m), HIH is supported by insider purchases and share buybacks. A dual/re-listing in Taiwan is also possible. Initiate coverage with a BUY and S$3.38 target price based on 0.94x P/B and a 2017F dividend yield of 7.9%.
INVESTMENT HIGHLIGHTS
&bull Initiate coverage with a BUY and target price of S$3.38, based on 0.94x P/B, implying 79.1% upside. We value Hotung Investment Holdings (HIH) at S$328.9m based on 0.94x P/B, pegged to a 10% discount to its peers&rsquo average.
&bull Grand Old Dame of Taiwan&rsquo s venture capitalist scene with ~30 solid years of experience and profits. HIH boasts close to 30 years of investment experience with a leg up in deal sourcing through its rich heritage as a venture capitalist (VC) pioneer in Taiwan as well as an impressive investment team. Barring the 2008 financial crisis, HIH has built a solid track record of strong profits over the last 10 years.
&bull Growth proxy to Greater China&rsquo s tech space with exposure to the hottest tech industries. Ytd, the FTSE Taiwan tech index rose 9.9% thanks to the global tech boom. With immense investor interest in Greater China Tech and global demand for new technology forecasted to push Taiwan&rsquo s GDP growth higher, we see buoyant valuation multiples, improved earnings and ultimately greater value for HIH.
&bull Focused on exits with at least one unlock targeted yearly fund management fee income up to NT$450m. With 200 IPO listings under its belt, HIH is always on the look-out for exits and cash recycling. Management has guided a strong pipeline for 2017 and beyond and we believe that HIH should be able to execute at least one exit/value unlock every year. Meanwhile, HIH&rsquo s fund management arm has the potential to provide income of more than NT$450m p.a., a figure not inclusive of profit sharing.
&bull Generous dividend yield of 7.9% for 2017-18F with share buybacks, management purchases and solid dividends records. Over the past five years, HIH has delivered a solid dividend cumulatively averaging S$0.66/share and equivalent to a 97% payout. Backed by a pipeline of investments and exits, management has guided that this will continue and we expect a 7.9% dividend yield for 2017-18. Other than dividends, there have been share buybacks (2.24% since May 16) and insider management purchases supporting management&rsquo s confidence in HIH.
&bull Undervalued at 0.52x P/B with around half of its market cap in net cash despite consistently profitable portfolio. Despite a consistently profitable portfolio (where individual investments are typically less than 5% of total value), HIH currently trades at a deep ~45% discount to our estimated 2017F NAV of S$338.7m. Furthermore, around half of its market cap is reflected in its NT$2.14b net cash balance sheet.
&bull Potential dual listing/re-list in Taiwan. The Taiwan exchange has amended regulations that previously disallowed VCs from being listed, meaning that HIH no longer has to tolerate depressed SGX valuations. With its strong reputation in Taiwan, we opine that there is a high chance that HIH may choose to dual list/re-list there.