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Sri Lanka Equity Forum » Expert Chamber » Analysis of REEF in depth

Analysis of REEF in depth

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1 Re: Analysis of REEF in depth on Tue Jan 24, 2012 10:04 am

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@Shajesh wrote:
@sapumal wrote:you will see a huge profit in CARS /Buki income statement. They (Palm oil) don't do translations in SLR, but statements are prepared using SLR. After rupee devalue All the net assets (foreign) marked in foreign currency will converted into SLR. That's 3% of the NAV
Also you have to consider strength of their currency relative to USD

I can see that you are crying. but i cant help u

I don't need your help. I don't have any CARS group share. I owns only reef.

2 Re: Analysis of REEF in depth on Tue Jan 24, 2012 10:14 am

stumpy

avatar
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Sappa,

Can I ask thing, if you don't mind!

Why do you going after Citrus this much?
I am expecting a honest answer from a big fan of REEF!

Thankx in advance!

3 Re: Analysis of REEF in depth on Tue Jan 24, 2012 10:48 am

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@stumpy wrote:Sappa,

Can I ask thing, if you don't mind!

Why do you going after Citrus this much?
I am expecting a honest answer from a big fan of REEF!

Thankx in advance!

I only have REEF. I bought it much higher. But there were some other I bought on higher. But I didn't had any faith on their potential than trading. I didn't post about them. But I believe potential in Leisure sector.
REEF is exponentially growing company. They 100% invested on no 1 sector in the Island. Within 2 years new management has done a great thing.

They have finalized 150 roomed 2 new hotels (Kalpitiya and Waskaduwa) 50 villas in kalpitiya - No burden to us. all the money is allocated
They build 40 new rooms in Hikkaduwa. Refurbishment 50 rooms
Purchased land in Passikudah to build another hotel
(Planing to build 200 room city hotel in Hambantota)

Other than that last two years, REEF have EPS = 9 ( Last year EPS = 7, this year upto now it is = 2 )

Most of the people saying new hotels won't in operation for next 2 years.
For me They will do something to make EPS even in difficult conditions.
They can sell CLND, They planing to early lease Villas in Kalpitiya. Still They have CLND stake @31. They will work to get the 9Acre land from UDA and sell CLND above 75

I can see NAV of this share can be improved to 40-45 during next two years. That is not difficult with having CLND stake and building 50 villas with allocated money.

4 Re: Analysis of REEF in depth on Tue Jan 24, 2012 10:57 pm

Chinwi

avatar
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@ sapumal,

Do you have the Independent Advisor's Report on REEF with you ? It was sent to the shareholder in Feb 2011 when Imagewise offered to buy all the REEF shares . You can see their cash flow forecast for next few years in that report.

As per the document, REEF will have 164,250 room nights in 2013/14 against current 18,250. That is an increase of 9 times. (900%)
This will generate a revenue of 2.2 billion against 71 million recorded in 2010. NAV can achieve an yearly increase of Rs. 15-20.

5 Re: Analysis of REEF in depth on Wed Jan 25, 2012 9:49 am

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
That's great news. Thanks for info Chinwi
No. I don't have that report. I didn't had reef normal share. It was mistake. After that I bought 100 voting shares in reef

6 Re: Analysis of REEF in depth on Wed Jan 25, 2012 10:32 am

innam

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@Chinwi wrote:@ sapumal,

Do you have the Independent Advisor's Report on REEF with you ? It was sent to the shareholder in Feb 2011 when Imagewise offered to buy all the REEF shares . You can see their cash flow forecast for next few years in that report.
As per the document, REEF will have 164,250 room nights in 2013/14 against current 18,250. That is an increase of 9 times. (900%)
This will generate a revenue of 2.2 billion against 71 million recorded in 2010. NAV can achieve an yearly increase of Rs. 15-20.

@Chinwi you've been a very rational and common sense investor but in this case you may be getting carried away by all the magical future promises (remember all the magical future promises made by GREG).
For NAV to increase by 15-20 rupees yearly they will need a profit of 3.3 billion (by 2015 they will have shares outstanding of around 170 million so to increase NAV by 20 you have to multiply 20 *170). Now magic revaluations can be used to show NAV increases of 20, BUT they can't achieve that from hotel operations.
They can achieve a top line sales of 2.2 billion (easily achievable if they have 164,000 room nights by charging 15-20k a night) but the bottom line would only be around 400 million by 2017 (or EPS of 3)
Also broker/advisor forecasts should be taken with a grain of salt (remember the magical EPS forecasts for EXPO by brokers and the magical valuation figures for CSF by independent advisors).

Only way for them to achieve EPS of even 5 a year is to open a couple of casinos in their hotels (do they have the political muscle to pull that off?)

7 Re: Analysis of REEF in depth on Wed Jan 25, 2012 10:42 am

cseguide

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
well said innam and thanks for your analusis

8 Re: Analysis of REEF in depth on Wed Jan 25, 2012 11:18 am

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
Wellcome back Innam. Nice to see you
These are not revaluation gains. Minor parties who going to buy shares from PP or IPO has to buy at higher price than the founders. Major shareholder will get a gain what it diluted from minors. That's what REEF did.

That gain was taken by all the parent companies of the listed companies.
VONE, LOLC (LOFC), UBC, BRWN (FLCH), SHL,... took that profit. No one sold without taking a profit. That's why they listed

If it is unethical all are unethical. Not only reef.

Innam , Forcasting possible CLND gain , Kalpitiya Villas gain and 3 new hotels in 3 years , do you think that REEF is not attractive at current price ?

9 Re: Analysis of REEF in depth on Wed Jan 25, 2012 11:37 am

Chinwi

avatar
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Thanks innam.
You are halfway correct. :-)

I am also not looking at it blindly but wanted to tell him they have forecast like that. Actually I wanted to know whether he refer that report also for his comments. If not I wanted to send it to him as he was interested in this Company. Not to make him blind but to provide some additional data on this subject.
I also do not know how they can forecast a profit over 2 billion with this revenue. I did not go to analyze that, yes, because I was 'carried away' (as you said :-) ) by some other feeling which I cannot escape.
May be I am wrong or day dreaming .

Actually, I am having this kind of thinking and I wanted to clear my mind:

IF they succeed in increasing the room numbers that way and make it a attractive hotel chain with other services there will be huge interest in their shares. In that case new investors ( specially foreign) or fund managers will look at it in long term and broad prospective, not by EPS or other indicators we use.
I was engaged in estimating similar hotels in middle east and Morocco before 'end of war' brought me here. The rates and cost of construction was huge compared to what we see here. Still those developers got international investors due to location factor and other reasons I do not know.
If Sri Lanka become a place like that in 2-3 years of time I feel we will see revaluation of everything.

I know this is not an appropriate way to evaluate a share . I think you can remember I was criticizing REEF same as we did to GREG.

Thanks


-----

Sorry. I have to sign-off. See you later.
Thank Innam for coming here for me .

10 Re: Analysis of REEF in depth on Wed Jan 25, 2012 1:21 pm

cseguide

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
by the way innam was a moderator earlier. why he is not a moderator no more?

11 Re: Analysis of REEF in depth on Wed Jan 25, 2012 1:54 pm

rijayasooriya

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Moved to expert chamber.

12 Re: Analysis of REEF in depth on Wed Jan 25, 2012 2:06 pm

cseguide

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@rijayasooriya wrote:Moved to expert chamber.
Name of the post should be changed. because mainly discussing about reef

13 Analysis of REEF in depth on Wed Jan 25, 2012 2:07 pm

Monster

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@cseguide wrote:
@rijayasooriya wrote:Moved to expert chamber.
Name of the post should be changed. because mainly discussing about reef
It's interesting topic. It's better, if you can split in to two topics.

14 Re: Analysis of REEF in depth on Wed Jan 25, 2012 2:19 pm

rijayasooriya

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Monster wrote:
@cseguide wrote:
@rijayasooriya wrote:Moved to expert chamber.
Name of the post should be changed. because mainly discussing about reef
It's interesting topic. It's better, if you can split in to two topics.
Done.So that first post is some what misleading.Sorry for that.

15 Re: Analysis of REEF in depth on Wed Jan 25, 2012 3:03 pm

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
Let me to summary all my findings

NAV = 30 , regular profit last year = 14.3 Mn ,
shares = 78,653,255 , W18 = 31,461,302 W19 = 62,922,604

Total shares when all the warrants get converted (if) = 173,037,161
Total money comes from warrants = 3.46Bn

Future earnings

Irregular Gains

Profits (based on NAV change) from listing Kalpitiya and Waskaduwa = 78.88 + 22.05 = 101Mn
Transfer gain , Hikkaduwa Land = 72Mn {366 (transferred) -294(book)
Hikkaduwa PP gain = 109 Mn (NAV will be 13. shares 36Mn *3 )

Total possible gain this year = 280Mn

Future possible gains

Leasing 50 villas in Kalpitiya - profit = 937Mn (Pros of Kal)
Selling CLND stake : average cost per share = 31.5
Listing Hikkaduwa
Passikudah (Land transfer, PP , Listing)

Regular earnings

From every subsidiary hotel REEF expecting a management fees. 3% of the Rev + 2% gross profit

Kalpitiya estimated Rev in 2018 = 1bn Gross profit around 700Mn

Estimated annual management fees from Kalpitiya = 46Mn
Waskaduwa = 46Mn
Hikkaduwa = 23Mn

Possible management fees from all the subs (Kalpitiya, Waskaduwa, Hikkaduwa, Passikudah, ... ) = more than 200 Mn

Profit share from regular hotel operations = ???


Citrus Leisure @2016

Citrus Hikkaduwa ( 92 rooms )
Citrus Waskaduwa (150) + 50 Villas
Citrus Kalpitiya (150)
Citrus Passikudah (50 villas initially)
Citrus Hambantota with 200 rooms (??? . on card)



Last edited by sapumal on Wed Jan 25, 2012 3:06 pm; edited 1 time in total

16 Re: Analysis of REEF in depth on Wed Jan 25, 2012 3:04 pm

greedy

avatar
Manager - Equity Analytics
Manager - Equity Analytics
The below is a matrix... showing profits required by REEF to justify its share price by 2016 at different P/E levels. REEF will have 173mn shares by 2016 after the conversion all of its warrants.


17 Re: Analysis of REEF in depth on Wed Jan 25, 2012 3:29 pm

innam

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@Chinwi wrote:

If Sri Lanka become a place like that in 2-3 years of time I feel we will see revaluation of everything.


Well that's fair enough, you have invested based on your experience and gut feel...less experienced investors with no profits to play with shouldn't invest on future magic. Trading is an entirely different matter.

Since you have invested in warrants hope you manage your risk. Remember if the price of the share is below 40 on conversion day the warrant price goes to 0.

Other negatives to note
-Whenever a warrant factory converts it increases the shareholding towards smaller retailers who are likely to get caught on margin calls (what happened over the last two trading day will repeat in future as well). in 2012 10 million shares (provided the big guys buy their allocation fully) will be issued to smaller retailers when the warrant converts.
-If you look at the shareholding and warrant holding list of REEF, it is eerily similar to GREG in that most of the big boys are on margin accounts. (funnily enough it's the same margin provider in both cases)

18 Re: Analysis of REEF in depth on Wed Jan 25, 2012 4:04 pm

lokuayya


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
innam ,

Nice to see you back.
You are one of the most seasoned analyst.
i would like to ask you about the current market situation because you are a one who always post comments without any bias.
How do you asses the current market situation , will it perform this year positively?can it reach beyond 6800.

19 Re: Analysis of REEF in depth on Wed Jan 25, 2012 4:14 pm

smallville

avatar
Associate Director - Equity Analytics
Associate Director - Equity Analytics
innam,

Being speculative in nature since some big boys are swinging this share time to time;
Since REEF is going to be a hotel chain, I expect some demand for their hotels situated in down-south region..

If REEF's going price is 40 now, putting all the fundamental aspects aside, isn't it fair to assume REEF N price will be over 100 in 3 years time? (at the time of conversion)

If so if you buy REEF.19 around 10, costing the conversion to 50, when these warrants listed at least the N price could be expected to be at 80 which if you sell gives u a good capital gain.. Even selling at 70 if margin calls occur is a good gain to me..

Just my thinking Smile

20 Re: Analysis of REEF in depth on Wed Jan 25, 2012 4:49 pm

cseguide

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@lokuayya wrote:innam ,

Nice to see you back.
You are one of the most seasoned analyst.
i would like to ask you about the current market situation because you are a one who always post comments without any bias.
How do you asses the current market situation , will it perform this year positively?can it reach beyond 6800.
going away from the topic somewhat but still relevant. I am also asking the same question from you innam ? please give your valuable comments on this.

21 Re: Analysis of REEF in depth on Wed Jan 25, 2012 5:08 pm

innam

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@cseguide wrote:
@lokuayya wrote:innam ,

How do you asses the current market situation , will it perform this year positively?can it reach beyond 6800.
going away from the topic somewhat but still relevant. I am also asking the same question from you innam ? please give your valuable comments on this.

Sorry i'm pretty useless at predicting market directions.

Just a simplistic analysis is that for the index to go past the figure @lokuayya mentioned.....1) PE has to go past 18 (looks unlikely given the current mood) or 2) EPS has to grow by 23% y-o-y while trailing PE remains at the current 14 levels (possible but a lot will depend on the overall economy) or 3) a combination of 1 & 2

So the key question is do you beleive that EPS will grow 25% y-o-y over the next 4 quarters?

22 Re: Analysis of REEF in depth on Wed Jan 25, 2012 5:24 pm

lokuayya


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
thanks innam,

23 Re: Analysis of REEF in depth on Wed Jan 25, 2012 5:42 pm

lokuayya


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

yes, innam, as you said the mood is still not good.when in good mood people can do any thing.

24 Re: Analysis of REEF in depth on Wed Jan 25, 2012 6:31 pm

cseguide

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Thanks innam

25 Re: Analysis of REEF in depth on Wed Jan 25, 2012 6:35 pm

smallville

avatar
Associate Director - Equity Analytics
Associate Director - Equity Analytics
On another thread Antonym mentioned the current PE of our market is still relatively too much compared with other developed markets while its cheaper than rest of the world..

http://mobile.bloomberg.com/apps/quote?ticker=CSEALL%3AIND

Then it has room for another crash may be to 5000 before coming up.. Who knows even all these can be manipulated know?

26 Re: Analysis of REEF in depth on Wed Jan 25, 2012 6:49 pm

market bull

avatar
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

lol! lol! lol!


@sapumal wrote:
@Shajesh wrote:
@sapumal wrote:you will see a huge profit in CARS /Buki income statement. They (Palm oil) don't do translations in SLR, but statements are prepared using SLR. After rupee devalue All the net assets (foreign) marked in foreign currency will converted into SLR. That's 3% of the NAV
Also you have to consider strength of their currency relative to USD

I can see that you are crying. but i cant help u

I don't need your help. I don't have any CARS group share. I owns only reef.

27 Re: Analysis of REEF in depth on Wed Jan 25, 2012 7:55 pm

Chinwi

avatar
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@greedy wrote:The below is a matrix... showing profits required by REEF to justify its share price by 2016 at different P/E levels. REEF will have 173mn shares by 2016 after the conversion all of its warrants.



Please Note I did not intend to promote this share. Now I feel I have talked too much about this.
Greedy,
The following is also reproduced from REEF cash flow forecast sent to us last year. .

Year 2016
Room nights 164,250
Room rate 160 Us$ (avr)
Revenue 2,487,340,134.00 ( Exchange Rate 116.00)
F&B Rev 2,035,000,000.00
Total Revenue 4,522,436,607.00
Direct Costs 904,487,321.00
Opr. Expences 994,936,054.00
Total Expenditure 1,899,423,375.00
Operational Profit 2,623,013,232.00 ( 2.623 billioin)

just the forecast.



28 Re: Analysis of REEF in depth on Wed Jan 25, 2012 8:22 pm

greedy

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@Chinwi,

Agreed Smile. I did not have that forecast. But I don't think anyone will say that you are promoting it. I can remember we discussed this share some 18 months ago in another forum Smile

I added my calculation for anyone to see whether those profit levels are achievable or not and I don't know how REEF's performance would be in the future!

29 Re: Analysis of REEF in depth on Wed Jan 25, 2012 8:55 pm

innam

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@Chinwi wrote:

The following is also reproduced from REEF cash flow forecast sent to us last year. .

Year 2016
Room nights 164,250
Room rate 160 Us$ (avr)
Revenue 2,487,340,134.00 ( Exchange Rate 116.00)
F&B Rev 2,035,000,000.00
Total Revenue 4,522,436,607.00


Well that's really helpful thanks for showing us the forecast.
So the forecast hopes to achieve Revenue from room and F&B of around 28,000 per day on average (during off season and tourist season).
That looks very optimistic (unless they have a casino and other extra curricular activities)....just as a comparison for the six months ended March 31 RHTL which is the highest star class listed hotel was only able to generate Revenue from room and F&B of 27,800 and KHL with 512,000 room nights was only able to generate 5.6 billion in revenue for the year ended March 2011 (REEF hopes to generate 4.5 billion in revenue from 164,000 room nights).
REEF needs to do a lot of magic to deliver the forcasted revenue in 2016. Note that i'm only pointing out the negatives, IF management deliver on what they promise then there's money to be made.

30 Re: Analysis of REEF in depth on Wed Jan 25, 2012 10:02 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Very good analyis and discussion, I am also following this share after spotted by smallville.

Next warrants is going to be converted on May 2012 ( I guess) So we have to wait and see the trend of the shares and warrants during the conversion. that would give some input for our analysis interms of price trend shareholding structure.

Thanks for the analysis.




31 Re: Analysis of REEF in depth on Wed Jan 25, 2012 10:06 pm

TortoizePlus

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@innam wrote:
@Chinwi wrote:

The following is also reproduced from REEF cash flow forecast sent to us last year. .

Year 2016
Room nights 164,250
Room rate 160 Us$ (avr)
Revenue 2,487,340,134.00 ( Exchange Rate 116.00)
F&B Rev 2,035,000,000.00
Total Revenue 4,522,436,607.00


Well that's really helpful thanks for showing us the forecast.
So the forecast hopes to achieve Revenue from room and F&B of around 28,000 per day on average (during off season and tourist season).
That looks very optimistic (unless they have a casino and other extra curricular activities)....just as a comparison for the six months ended March 31 RHTL which is the highest star class listed hotel was only able to generate Revenue from room and F&B of 27,800 and KHL with 512,000 room nights was only able to generate 5.6 billion in revenue for the year ended March 2011 (REEF hopes to generate 4.5 billion in revenue from 164,000 room nights).
REEF needs to do a lot of magic to deliver the forcasted revenue in 2016. Note that i'm only pointing out the negatives, IF management deliver on what they promise then there's money to be made.

Thanks innam and Chinwi,

Tourist arrival is growing more than we expected. This month only we have near 100,000 arrivals. The figures hotels show today may be completely different when we see 2013 results. When considering the growth, I see REEF expectation is less than optimistic level but at the end you have to grab the market share which very competitive especially in beach resorts to justify the figures.

Further, when you analyze top shareholders in REEF and its subsidiaries you can clearly identify backup given by some government politicians which other small palyers can achieve.

I don’t have REEF at the moment but we’ll consider when we see good investor sentiment in future.

Again thanks for the healthy discusstion.

32 Re: Analysis of REEF in depth on Thu Jan 26, 2012 9:44 am

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
Hikkaduwa - 93
Waskaduwa - 155
Kalpitiya -150
Passikudah - 50 (Initial stage)
Hambantota - 200 (still nothing has done)

Upto now they have,

finalized 400 rooms.
50 is about to finalized. (High end tourism)
(450 )

200 rooms are on card

total 650 rooms are on card. What could be the probable room nights ?

If they built a hotel on Passikudah (when it was included to the hot map) I hope they will go beyond 800 rooms

Just a hope. But this is not 100% my thinking. REEF have expressed their desire to build hotels in Hambatota and Passikudah


33 Re: Analysis of REEF in depth on Thu Jan 26, 2012 10:56 am

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
Thanks Chinwi. This will useful for my further analysis

@Chinwi wrote:
Please Note I did not intend to promote this share. Now I feel I have talked too much about this.
Greedy,
The following is also reproduced from REEF cash flow forecast sent to us last year. .

Year 2016
Room nights 164,250
Room rate 160 Us$ (avr)
Revenue 2,487,340,134.00 ( Exchange Rate 116.00)
F&B Rev 2,035,000,000.00
Total Revenue 4,522,436,607.00
Direct Costs 904,487,321.00
Opr. Expences 994,936,054.00
Total Expenditure 1,899,423,375.00
Operational Profit 2,623,013,232.00 ( 2.623 billioin)

just the forecast.


Hoping we are going to hit exchange rate of 120 in near future. Basil also put pressure on Cabral.

@seyon wrote:Very good analyis and discussion, I am also following this share after spotted by smallville.

Next warrants is going to be converted on May 2012 ( I guess) So we have to wait and see the trend of the shares and warrants during the conversion. that would give some input for our analysis interms of price trend shareholding structure.

Thanks for the analysis.

Interesting person in the list is Tharana Gangul . Very close person to නිමල්, ධම්මික, CEO and director of RCL

He didn't had much warrants(1Mn) . But from 2010/12/30 to 2011/9/30 he has bought further 4Mn warrants (W18). Average cost may be over 25. He is one who know about REEF future (may be for trading purposes).
Director of RCL
RCL invested on REEF
RCL has connection with නිමල් පෙරෙරා
නිමල් , දිලිත, Amunumaga close persons



Also we thought when DP sold reef @45 it is very much over valued (15.7 Mn shares). But when it released the quarter report on 2011 March we can assume it is fairly valued
Profit for 3 months = 14.3Mn

EPS = .91
Annualized EPS = 3.65
PE = 12.3

With the increase of tourist arrival and increased room charges profit of 57Mn (PE = 12.3 ) hadn't been a very difficult achievement.
But they chose to expand.



Last edited by sapumal on Thu Jan 26, 2012 1:10 pm; edited 1 time in total

34 Re: Analysis of REEF in depth on Thu Jan 26, 2012 11:18 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@sapumal wrote:

Interesting person in the list is Tharana Gangul . Very close person to නිමල්, ධම්මික, CEO and director of RCL

He didn't had much warrants(1Mn) . But from 2010/12/30 to 2011/9/30 he has bought further 4Mn warrants (W18). Average cost may be over 25. He is one who know about REEF future (may be for trading purposes).
Director of RCL
RCL invested on REEF
RCL has connection with නිමල් පෙරෙරා
නිමල් , දිලිත, Amunumaga close persons

sapumal

Yes I know all related parties to නිමල් & දිලිත are in the list, but anything will be happend in anytime. As innam pointed these guys holding warrants in margin a/c, some times they might be forced to sell some qty when mkt drops. However i am also bullish on warrants 19 after smallville notice. But i am waiting till the next warrant conversion.

35 Re: Analysis of REEF in depth on Thu Jan 26, 2012 1:58 pm

Chinwi

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Associate Director - Equity Analytics
Associate Director - Equity Analytics
Seyon
However i am also bullish on warrants 19 after smallville notice. But i am waiting till the next warrant conversion

That is clever.
We have lot of time to observe this share and take decisions - to collect it or not-.

There may be ups and downs in next 1-2 years creating opportunities if we wanted to collect it.
At moment I bet 5% of my money on this.

As Innam pointed out this could be very risky as their calculations are unrealistic. But I feel this is too good to loose IF they succeeded in achieving even half of their targets in 2-3 years. The development of infrastructure by the Govt. in this areas will definitely boost the values.

TortoizePlus
Further, when you analyze top shareholders in REEF and its subsidiaries you can clearly identify backup given by some government politicians which other small palyers can achieve.

That is another + point I see here when forecasting the future of this entity. ( Not about the ethical part of these dealings)

The Govt. is trying to get funds from Qatar to build toll highway to Kalpitiya from KAT. - Today's news.
I think now we can imagine their plans and understand why they (REEF) put so much money and interest in non-tourist area like Kalpitiya. All are inter connected.
Yesterday I got reliable inside news about deals with another world famous Hotel chain and their +ve response in coming to establish in Hambantota. I have to Refrain disclosing the name because it will be a huge showcase and surprise if they come to anywhere in Asia to start business. To strengthen their plans they need quick access to up country too. CMB-Kandy highway is going to get priority. There will be another good road from Mattala to N'Eliya via Wellawaya.
Ratmalana Airport is becoming a very important place.
At the moment there is a problem due to limited length of the runway (6050 ft)
Extending of it is a problem because the marshy land in Bellanwila side -runway 04- and Galle road is there in sea side end- runway 22-. There is a proposal to send the Galle Road under the runway (like in Dubai - East end) or divert the Galle road towards the beach.

36 Re: Analysis of REEF in depth on Thu Jan 26, 2012 9:44 pm

smallville

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Associate Director - Equity Analytics
Associate Director - Equity Analytics
@seyon wrote: However i am also bullish on warrants 19 after smallville notice. But i am waiting till the next warrant conversion.

Frankly, I've to give credit to Chinwi for pointing me in this direction.. I was quite happy about VONE as a long trm hold and was trying to find out the info on it then a discussion with Chinwi changed my attention to REEF19.. Both were at the same range those days and I wanted to wait to buy it ard 10-15 range.. Wink
So still this has not come to my price but 13-14 is also ok for me.. But I've not started buying this apart from the 400 share I hold Wink he hee..

I still believe in a second chance to buy low..

Even if we put aside the fundamental and forecasted valuations, I think its a fair assumption that REEF can trade above 100 in 2-3 years time.. So with a conversion price of 40 for REEF19, its an easy 20% gain in 2-3 years.. Even sometimes REEF19 without converting can give u a 20% gain cuz REEF is a speculative share and there are ppl beind this to drag this to next level..

37 Re: Analysis of REEF in depth on Thu Jan 26, 2012 11:59 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@smallville wrote:
@seyon wrote: However i am also bullish on warrants 19 after smallville notice. But i am waiting till the next warrant conversion.

Frankly, I've to give credit to Chinwi for pointing me in this direction.. I was quite happy about VONE as a long trm hold and was trying to find out the info on it then a discussion with Chinwi changed my attention to REEF19.. Both were at the same range those days and I wanted to wait to buy it ard 10-15 range.. Wink
So still this has not come to my price but 13-14 is also ok for me.. But I've not started buying this apart from the 400 share I hold Wink he hee..

I still believe in a second chance to buy low..

Even if we put aside the fundamental and forecasted valuations, I think its a fair assumption that REEF can trade above 100 in 2-3 years time.. So with a conversion price of 40 for REEF19, its an easy 20% gain in 2-3 years.. Even sometimes REEF19 without converting can give u a 20% gain cuz REEF is a speculative share and there are ppl beind this to drag this to next level..

Ok Small.. Thanks to Chinwi and you. I am also waiting till next warrant conversion. The way mkt goes, We may be able to buy less than Rs.10.. I am waiting the days to come

20% gain in 2-3 years ????? I can't understand the calculation. Pls explain..

38 Re: Analysis of REEF in depth on Fri Jan 27, 2012 8:16 am

Chinwi

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Associate Director - Equity Analytics
Associate Director - Equity Analytics
@seyon wrote:

Ok Small.. Thanks to Chinwi and you. I am also waiting till next warrant conversion. The way mkt goes, We may be able to buy less than Rs.10.. I am waiting the days to come

20% gain in 2-3 years ????? I can't understand the calculation. Pls explain..

Seyon,
I think it is a typo. ( or may be 200%)
Say you bought REEFw19 @ 15
If Reef N trade @ 100 in 2015
then REEFw19 = 100 - 40
= 60
your gain 60 - 15 = 45
45/15 = 3
= 300% ( without considering inflation)
= 200 % - 400 % possible

39 Re: Analysis of REEF in depth on Fri Jan 27, 2012 8:22 am

Chinwi

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Associate Director - Equity Analytics
Associate Director - Equity Analytics
+ contd-

if REEF N trade @ say 50 in 2015 (due to any unexpected reason)
Then REEF w19 = 50 - 40 = 10

(your cost = 15 + 40 = 55)
= LOSS

40 Re: Analysis of REEF in depth on Fri Jan 27, 2012 8:41 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Chinwi wrote:+ contd-

if REEF N trade @ say 50 in 2015 (due to any unexpected reason)
Then REEF w19 = 50 - 40 = 10

(your cost = 15 + 40 = 55)
= LOSS

Thanks Chinwi. I don't think. At present Investor paying Rs.40 for the intial stage, If they built up within target time and start their operation, that would enhance the value of the share certainly. Anyway we will wait and see.

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