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Sri Lanka Equity Forum » Stock Market Talk » CSE announcement about REEF. REEF 350Mn capital gain ?

CSE announcement about REEF. REEF 350Mn capital gain ?

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sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
http://www.cse.lk/cmt/upload_cse_announcements/5591299482304_.pdf

So far, 350Mn capital gain (EPS = Rs 7.50)
keep your eye on this share...

hotel cost
Waskaduwa 380,000,000 243,940,962
Kalpitiya 169,000,000 129,728,960
177,500,000
gain 352,830,078
726,500,000 726,500,000
shares 47,000,000
EPS 7.507022936

salt

salt
Vice President - Equity Analytics
Vice President - Equity Analytics
@sapumal,

This is one time gain, isn't it?

So, REEF can not generate this kind of profits every year. Value of onetime gain is (if the market didn't know at alll about this) is equal to the amount of capital gain. In this case, if market didn't expect anything from REEF on this deal, it should go up by Rs. 7.50

Similar amount of increarse in NAV

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics
Capital gain from selling to a subsidiary. Where does the difference in the purchase price and the price charged from the subsidiary come from? You will be paying it when you subscribe to the IPO.

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
yes. It is one time gain

I read a news (I can't remember the link) about Citrus Leisure Plc. It said they are planning to further expand the hotel chain
We can expect similar kind of things during next 3,4 years. It is easy for them to do it because they don't invest huge money for hotels. Their approach is collect from private placement/listing

This can be capital gain 1 from these 2 subs

* There is a land + money. But to build a hotel lot of effort/work/management needed to be done. I am sure REEF wont do these things for free...( They will do what they did to these lands)
* These subsidiaries have been heavily over subscribed (According to Mr Dilitha Jayaweera). To introduce these subs to CSE, REEF will have to sell some shares (10%-20%) to the market. Most probably REEF will expect some profit from there as well(otherwise they will choose IPO)

According to director behavior they can list(my opinion) the Hikkaduwa hotel too because they need money to do repairs

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@tubal wrote:Capital gain from selling to a subsidiary. Where does the difference in the purchase price and the price charged from the subsidiary come from? You will be paying it when you subscribe to the IPO.

private placement is already done (don't know much about all the people/institutes. But Vallibel ONE is there. They have subscribed to 37% and 27% of two hotels)
I don't think REEF will sale more than 50% of these hotels. They can sold them(13% and 23%) @10 easily(According to Dilitha). When they are listing at CSE they will report another kind of capital gain(if they sell a share more than Rs10)

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
capital gain(realized) will be 50% of the above values if they only sell 12% and 22% of subs @10
rest of the 50% are unrealized capital gains

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@tabul
Are you sure they won't do another announcement saying we have did/hope to do these kind of things and for that we have assigned this much of shares
Initially they told they have invested 880Mn and 1000Mn in two subs. Now one has revealed
We could forecast rest of the things before REEF announcing them, if you shared your expert knowledge to
http://forum.srilankaequity.com/t1465-tabulrajithagaja-meta-trader

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Is this like I use 50 Rupees from my left pocket to buy a loaf of bread and selling it back to my right pocket for 100 Rupees to claim 50 Rs gain ?.

No. this is better than that. in this case no money is involved.

In a stock market where 10/- payable right trade @ 15 while its normal share trade @ 12 , these things are well accepted.

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
if it is a group of companies will they get any income in the group accounts due to this transaction?

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@Chinwi wrote:Is this like I use 50 Rupees from my left pocket to buy a loaf of bread and selling it back to my right pocket for 100 Rupees to claim 50 Rs gain ?.

No. this is better than that. in this case no money is involved.

In a stock market where 10/- payable right trade @ 15 while its normal share trade @ 12 , these things are well accepted.


spot on Chinwi.
I edited my previous post. I haven't realized what you mean at first read



Last edited by sapumal on Mon Mar 07, 2011 10:04 pm; edited 1 time in total

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics
@sapumal wrote:
@Chinwi wrote:Is this like I use 50 Rupees from my left pocket to buy a loaf of bread and selling it back to my right pocket for 100 Rupees to claim 50 Rs gain ?.

No. this is better than that. in this case no money is involved.

In a stock market where 10/- payable right trade @ 15 while its normal share trade @ 12 , these things are well accepted.


your example is not correct Chinwi
selling person is 100% you but buying are not 100% done by you. In your example you buy a bread for 50. But when you sell a bread(keeping 50%) for 100 you have a Rs50 gain + half of the bread. It is clear you have a gain of half of bread

Yeah, that's fine as long as you don't mind selling that loaf of bread with 50% profit to your wife or kids.

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@tubal wrote:Yeah, that's fine as long as you don't mind selling that loaf of bread with 50% profit to your wife or kids.

Tabul, it is only an example.
Actual thing is REEF has already sold(or transfer) a land to a subsidiary which has minority interests (may be around 50%) keeping 350 Mn cap gain.

13CSE announcement about REEF. REEF 350Mn capital gain ? Empty Why Citrus Need Money on Mon Mar 07, 2011 9:46 pm

Chabbi

Chabbi
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@sapumal wrote:yes. It is one time gain

I read a news (I can't remember the link) about Citrus Leisure Plc. It said they are planning to further expand the hotel chain
We can expect similar kind of things during next 3,4 years. It is easy for them to do it because they don't invest huge money for hotels. Their approach is collect from private placement/listing

This can be capital gain 1 from these 2 subs

* There is a land + money. But to build a hotel lot of effort/work/management needed to be done. I am sure REEF wont do these things for free...( They will do what they did to these lands)
* These subsidiaries have been heavily over subscribed (According to Mr Dilitha Jayaweera). To introduce these subs to CSE, REEF will have to sell some shares (10%-20%) to the market. Most probably REEF will expect some profit from there as well(otherwise they will choose IPO)

According to director behavior they can list(my opinion) the Hikkaduwa hotel too because they need money to do repairs

Ur saying that REEF people need money to repaire the existing hotels.
Im Totally confused with REEF announcements. After REEF sold from Amaya group new directors went for consolidation & right issue. They said the right issued collect money will be go for repair of Exisitng Amaya REEF hotel @ Hikka .. Then later comming W wil be utilized for building of 2 hotels.. 1st two W will go for one project & last W is for capture a hotel or build new hotel. But now Story is totally changed ....
Can some body explain this ???

achala75


Senior Equity Analytic
Senior Equity Analytic
Reef ! Reef!! Reef!!! For bme No transferent at all.

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@Chabbi wrote:
Ur saying that REEF people need money to repaire the existing hotels.
Im Totally confused with REEF announcements. After REEF sold from Amaya group new directors went for consolidation & right issue. They said the right issued collect money will be go for repair of Exisitng Amaya REEF hotel @ Hikka .. Then later comming W wil be utilized for building of 2 hotels.. 1st two W will go for one project & last W is for capture a hotel or build new hotel. But now Story is totally changed ....
Can some body explain this ???

I don't know what was there intend at that time. But they have already collected money to two hotels. I don't know how they find money but hotel will be closed mid of April to repairing

salt

salt
Vice President - Equity Analytics
Vice President - Equity Analytics
@sapumal wrote:yes. It is one time gain

I read a news (I can't remember the link) about Citrus Leisure Plc. It said they are planning to further expand the hotel chain
We can expect similar kind of things during next 3,4 years. It is easy for them to do it because they don't invest huge money for hotels. Their approach is collect from private placement/listing

This can be capital gain 1 from these 2 subs

* There is a land + money. But to build a hotel lot of effort/work/management needed to be done. I am sure REEF wont do these things for free...( They will do what they did to these lands)
* These subsidiaries have been heavily over subscribed (According to Mr Dilitha Jayaweera). To introduce these subs to CSE, REEF will have to sell some shares (10%-20%) to the market. Most probably REEF will expect some profit from there as well(otherwise they will choose IPO)

According to director behavior they can list(my opinion) the Hikkaduwa hotel too because they need money to do repairs

For listing in the CSE, a company should have a sufficiant operating history with positive profits
Honestly , i too confused now.

@Chinwi,

I really like the way you write on the spot. I still remember Mercedez story on GREG. Well said!

Meta Trader

Meta Trader
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
omg.
i 'm totally confused Shocked

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@Chabbi wrote:Ur saying that REEF people need money to repaire the existing hotels.
Im Totally confused with REEF announcements. After REEF sold from Amaya group new directors went for consolidation & right issue. They said the right issued collect money will be go for repair of Exisitng Amaya REEF hotel @ Hikka .. Then later comming W wil be utilized for building of 2 hotels.. 1st two W will go for one project & last W is for capture a hotel or build new hotel. But now Story is totally changed ....
Can some body explain this ???

They have started repairing the Hikka hotel. Also my friend has saw a new layer of building is constructing in front of the hotel, where the former corridor was to support additional 40 rooms. They are doing what they promised. Two hotel has become too early and we can't blame directors for that.

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