Sunday, November 16, 2014

Hong Kong Land - My CNAV Analysis

Hong kong Land H78
Note : There are some correction in my calculation after highlighted by B and hence the result is at the opposite site now! ;-)

After my earlier CNAV analysis of SembCorp Industries (U96), it seems to garner quite a fair bit of discussion/comment. One of the key question remain : Are there still CNAV stocks left? 

I am sure there are, just that it takes time to identify them. One of our active blogger friend, B (from A Path To Forever Financial Freedom) has indicated a potential counter, Hong Kong Land (H78) that possibly fir the CNAV parameters. And he is absolutely right (kudos to him and I think he has done his "homework"). 

This post is to affirm his view! 

Stock In Evaluation : Hong Kong Land (H78) 

The Key Quantitative Indicators of CNAV Strategy (basing on 2013 Annual Report figures):

Net Asset Value (NAV)                             = $22.99 $11.45
Conservative Net Asset Value (CNAV2)  = $9.49 $4.75
Current Price                                              = $7.05
Discount For CNAV2                                = +26% -49%

Conclusion : Finally, a positive "Discount for CNAV2" counter. Also, it is traded at a 69% discount when compared with the less conservative indicator, NAV. With its negative CNAV2 discount, it is traded at a premium. However, if compared against the less conservative indicator, NAV, it is traded at a discount of 38%.

The P.O.F Scores of CNAV Strategy: 
Profitability Score         = 1 (With the PE ratio of 14.4)

Operational Efficiency = 1 (with three consecutive years of positive operating cash flow)

Financial Efficiency     = 1 (Debt To Equity Ratio of 23% only)

Conclusion : A perfect P.O.F Scoring.

Final Conclusion : From pure CNAV perspective, Hong Kong Land seems to fit perfectly within the parameters. 
(Disclaimer : This is not a supporting call for investment, it is just for pure information sharing)  From CNAV perspective, Hong Kong Land would entitled to be in the watch list. 

Are you vested in Hong Kong Land? What is your take on this stock?


  1. Hi Richard

    Thanks for doing the cnav analysis once again.

    Finally, we found one which meets the cnav2 conservative criteria.

    HK Land does really look solid and is one of the counter I am monitoring at the moment. I wanted to add them during the turmoil not too long ago but they have rebounded since then.

    On a side note, how do you get the NAV of $22.99 for FY2013. Based on the annual report, I think it should be at around $11.41, but maybe it's my mistake ;)

    1. B : OMG! You are right! I've took the wrong number for "Outstanding Shares" and hence the wrong result. My bad. I've since adjusted the calculation and sadly to say that it seems that Hong Kong Land is still not conservative enough from CNAV2 perspective lol

  2. Hi Richard,

    You are dispatched by HKL, so the deliberate the error. Haha... Just kidding. HKL is a good stock and I had been watching it for awhile.
    But do you have the P/B over last 5-10 years? Or where can I get the tool / website to show that?

    Hi B, I remember you did that for OUE right? Which tool? Is it free?


    1. Hi Rolf, hahaha.. Off hand I do not have the information that you are looking for, but I believed you can get it from their IR (Investor Relation) page. ;-)

    2. Hi Richard, thanks. Know about IR but not sure they provide such info. Anyway thanks. Please continue to CNAV.... :-)

  3. sorry if I am too direct

    have you ever see the stock price of HKL before?
    It currently trades at around $7 (in usd)
    most investors one glance at the $22 nav confirm know something not right already

    maybe in future you should just stick to stocks that you are familiar with instead, less chance of such a major error

    1. Hi Felix, thanks for dropping by. Nope, never invest in HKL before.

      I guess everyone make mistake (but maybe not you), at least I correct my mistake openly ;-)

      Oh btw, this is not meant to make any investment decision, it is just a post to response to my peer bloggers' request.

  4. Hi Richard, thanks for doing the CNAV analysis.
    I was double checking my CNAV working against yours, and there were differences.
    I computed an NAV per share of $11.43 (USD) and CNAV2 value per share of U$8.30.
    May i ask how did you arrive at your figure ?

  5. Apologies, my CNAV2 value should U$9.60. Calculation error

    1. KH : Thanks for dropping by and comment.

      Will retrieve my working and come back to you again.

      Merry X'mas and Happy New Year to you!


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