RENU - Investment portfolio value

RENU in simple terms a Hotel + Investment Trust.. You'll find out why when u see their investment portfolio. Anyways this took me several hours to complete as I had checked on the rights/ subdivisions as well..

RENU has always been in my dream to collect and failed several attempts..

This is not a comprehensive analysis, just a briefing on their investments..



Now we're coming to the interesting part, if my calculations are correct this is now trading below its modest NAV (adjusted to their investment portfolio value)



Note;

1) As per the independent valuation conducted by a professionally qualified independent valuer Mr. T. Hilmy Farook on 19th June 2010 the fair market value of property bearing assessment no. 326, Galle Road, Colombo 3 is Rs. 226,000,000. However the the Company policy is to record its Property, Plant and Equipment at Cost. Therefore; this value has not been recorded in the Financial Statements.

2) Investments at Market value are based on the major investments as per 2011 AR. It was evident that RENU has sold some of its shares for the renovation of Hotel and also added NDB and few others during 2011. The hotel refurbishment cost was 125 Mn and was 80% funded by investments + a bank overdraft (42 Mn). However this portion has not been taken into account as I beleive their AR highlights the shares outstanding a post refurbishment portfolio.
Further to get a more accurate figure the market price of shares has been revalued to 26th August 2011 market value.
However the the Company policy is to record its investments @ cost.

3) Current Assets were taken from the 3th June 2011 Interim financial report. It includes Trade & Other recievables + Cash + Inventories + Pre-Payments.

4) Net Liabilities include Non-Current Liabilities of 7.9Mn + Current Liabilities of 17.1 Mn as @ 30 June 2011 Interim financial report.

5) NAV (without other investments) - This means NAV without (Investments in unquoted companies + Investments in Debentures).

6) Amount due from Related Parties - Company has granted a loan amounting Rs. 325,551,194 (AUD 2,911,386) during the year to REN Pty Limited which is incorporated in Australia. Interest rate on this loan is 5% to 7% per annum. This loan is totally repayable by 30 th March 2019. A first ranking fixed and floating debenture charge over all of the undertakings of the borrower is the security to this loan.
Only a part of this value was taken into consideration due to the time period of settlement being 8 long years. (325,551,194 / 8 = 40,693,899.25)

7) Building re-valuation was taken from Asia Securities Valuation Document in May 2010. It is to be noted that the building could go under depreciataion but the land value could appreciate.
source - http://www.asiacapital.lk/pdf/TourismSectorReport.pdf

Based on the above calculations, RENU to me is trading at a significant discounted price to the NAV based on market value of assets as of 30 June 2011.

P.S. I've got some RENU shares which I collected a week back.

@Samllville,

Good analysis, I did something similar last year in another forum. I expect RENU's Annual Report soon (in couple of days/couple of weeks) You can do a more accurate analysis once you have AR2010/2011.

I have not replied to your PMs yet, coz I have not reached the minimum 10 posts yet

greedy wrote:@Samllville,

Good analysis, I did something similar last year in another forum. I expect RENU's Annual Report soon (in couple of days/couple of weeks) You can do a more accurate analysis once you have AR2010/2011.

I have not replied to your PMs yet, coz I have not reached the minimum 10 posts yet

Thanks greedy, I was quite patientless with their report so wanted to do an analysis to see whether I've bought the correct one (ye.. only after buying.. )
Also can u send me a link to that earlier post or ur excel file?, I'd like to see whther I've taken correct assets for the final valuation..

Hmmm 138 views but only 1 comment so far..

Appreciating your hard work

Small,

Please check , I think there was COMB subdivision of shares in May 2010. So the number of share should be higher if I am not mistaken and RENU portfolio value even higher if they still retain the older portfolio. From memory your calculations is a bit different from one I did some time ago which I cannot find now.

In essence RENU is solid share with it portfolio.

smallville wrote:

greedy wrote:@Samllville,

Good analysis, I did something similar last year in another forum. I expect RENU's Annual Report soon (in couple of days/couple of weeks) You can do a more accurate analysis once you have AR2010/2011.

Hmmm 138 views but only 1 comment so far..

@greedy: Your analysis on another forum was my first introduction to this stock, which is now my favourite... I'm also waiting for AR 2010/11; should be out this week.
@smallville: I appreciate the effort. No other comments because actions speak louder than words - I placed a Buy order for 100 more shares!

Smallville, great work. Its so refreshing to see some actual analysis for a change compared to what passes for analysis most of the time. I have never really paid much attention to this stock, actually to be honest I have not looked into to it ever! Thanks to your hard work, I was prompted to take a look. I think that you are spot on in identifying some significant value that is not being recognized by the market. I just love these chances to buy Rs 500 worth of value for Rs 350! Much better than the other way around with these "shares of the day"nonsense. Please keep up the great work and thanks for sharing with us.

slstock wrote:Please check , I think there was COMB subdivision of shares in May 2010. So the number of share should be higher if I am not mistaken. From memory your calculations is a bit different from one I did some time ago which I cannot find now.

In essence RENU is solid share with it portfolio.

I think I've counted that sub and the rights issue recently, also there was a script div given in latter 2010.. So COMB was the biggest headache I had.. I'll check again..Another sub is due as at end of trading on - 09.Sep. 2011.

Thier portfolio value could be lesser than my analysis as they've sold part of it to fund the refurbishment of Hotel.. Lets see..

kiwi wrote:Smallville, great work. Its so refreshing to see some actual analysis for a change compared to what passes for analysis most of the time. I have never really paid much attention to this stock, actually to be honest I have not looked into to it ever! Thanks to your hard work, I was prompted to take a look. I think that you are spot on in identifying some significant value that is not being recognized by the market. I just love these chances to buy Rs 500 worth of value for Rs 350! Much better than the other way around with these "shares of the day"nonsense. Please keep up the great work and thanks for sharing with us.

Friend have a look on CABO as well, they are related also they declared reasonably above return compare to the RENU, so have a look and let us know what do you thing about it?

smallville wrote:

slstock wrote:Please check , I think there was COMB subdivision of shares in May 2010. So the number of share should be higher if I am not mistaken. From memory your calculations is a bit different from one I did some time ago which I cannot find now.

In essence RENU is solid share with it portfolio.

I think I've counted that sub and the rights issue recently, also there was a script div given in latter 2010.. So COMB was the biggest headache I had.. I'll check again..Another sub is due as at end of trading on - 09.Sep. 2011.

If i am not mistaken they have listed the scrip dividend on mid of april, yes another split is pending for 1 for 1, so had a look on my fathers file as per the available records they have given frequent bonus or rights for almost on every year!

smallville wrote:

slstock wrote:Please check , I think there was COMB subdivision of shares in May 2010. So the number of share should be higher if I am not mistaken. From memory your calculations is a bit different from one I did some time ago which I cannot find now.

In essence RENU is solid share with it portfolio.

I think I've counted that sub and the rights issue recently, also there was a script div given in latter 2010.. So COMB was the biggest headache I had.. I'll check again..Another sub is due as at end of trading on - 09.Sep. 2011.

Thier portfolio value could be lesser than my analysis as they've sold part of it to fund the refurbishment of Hotel.. Lets see..

Small,
According to 2010 report , they had 943066 shares by March 31st. Think the split was done in May 2010 if I am not mistaken

[/quote]Friend have a look on CABO as well, they are related also they declared reasonably above return compare to the RENU, so have a look and let us know what do you thing about it?[/quote]

Thanks for that, just as I was about to give up on this forum as I was sick and tired of "what do you think of xyz share" or "what will be today's share" nonsense. I was also seriously considering exiting the market as I have some serious concerns as to what goes on. My faith is restored in the forum at least and I have some work to do. Gaja, I will have a look at CABO and tell you what I honestly think. Looking at the price action, I feel that this is a good time to enter into RENU

kiwi wrote:

Friend have a look on CABO as well, they are related also they declared reasonably above return compare to the RENU, so have a look and let us know what do you thing about it?[/quote]

Thanks for that, just as I was about to give up on this forum as I was sick and tired of "what do you think of xyz share" or "what will be today's share" nonsense. I was also seriously considering exiting the market as I have some serious concerns as to what goes on. My faith is restored in the forum at least and I have some work to do. Gaja, I will have a look at CABO and tell you what I honestly think. Looking at the price action, I feel that this is a good time to enter into RENU [/quote]

Presently i have both ( Renu & Cabo ), in my portfolio, plan to sell some other shares and bought further of these, yes as you said after going through the 30.06.2011 quarter results, i thought of increase the holding, to determine the value i am also waiting for the annual report, at the same time really appreciate the work done by the friend to gave a idea about the present market value of the PF.

Thanks smallville for your effort + from me. I was the happiest person to see that with a good volume of RENU.
thanks

I love this share. RENU is not only a Hotel it has a very good investment PFand they have a very good knowledge in PF management. This is a goldmine for investors if the Country could continue present growth rate of 7.5%-8.0 %

smallville, you are really super!!! The forum is meant for these type of discussions and illustrations. Thank you for all the excellent contributions.

hmmm RENU's medium term plan seems to be build a new hotel (probably partly owned with their family company).

http://www.tops.lk/article32739-completes-rs-125-m-refurbishment-renuka-looks-for-land-to-build-new-star-hotel.html

http://www.thebottomline.lk/2011/02/13/page13.html



the two news articles tie up with why they are holding 70 rupees per share in cash and 50 rupees per share in trade recievables.

as a responsible management team i would expect them to shed more light on their future plans either in their Annual Report or at the AGM.

Just sitting on 120 rupees per share in cash and receivables for too long does not add value to the minority shareholders.

innam wrote:hmmm RENU's medium term plan seems to be build a new hotel (probably partly owned with their family company).

http://www.tops.lk/article32739-completes-rs-125-m-refurbishment-renuka-looks-for-land-to-build-new-star-hotel.html

http://www.thebottomline.lk/2011/02/13/page13.html



the two news articles tie up with why they are holding 70 rupees per share in cash and 50 rupees per share in trade recievables.

as a responsible management team i would expect them to shed more light on their future plans either in their Annual Report or at the AGM.

Just sitting on 120 rupees per share in cash and receivables for too long does not add value to the minority shareholders.

They are having something in mind, and with that purpose only they declared the same dividend as last year, when everybody expected it to be high.

Gaja wrote:

innam wrote:hmmm RENU's medium term plan seems to be build a new hotel (probably partly owned with their family company).

http://www.tops.lk/article32739-completes-rs-125-m-refurbishment-renuka-looks-for-land-to-build-new-star-hotel.html

http://www.thebottomline.lk/2011/02/13/page13.html



the two news articles tie up with why they are holding 70 rupees per share in cash and 50 rupees per share in trade recievables.

as a responsible management team i would expect them to shed more light on their future plans either in their Annual Report or at the AGM.

Just sitting on 120 rupees per share in cash and receivables for too long does not add value to the minority shareholders.

They are having something in mind, and with that purpose only they declared the same dividend as last year, when everybody expected it to be high.

Am sure most of us share holders don't mind smaller dividends if the company utilizes money wisely to bring greater shareholder wealth and capital gain. Annual report it to look out for.. as we all are.

Gaja wrote:

kiwi wrote:Smallville, great work. Its so refreshing to see some actual analysis for a change compared to what passes for analysis most of the time. I have never really paid much attention to this stock, actually to be honest I have not looked into to it ever! Thanks to your hard work, I was prompted to take a look. I think that you are spot on in identifying some significant value that is not being recognized by the market. I just love these chances to buy Rs 500 worth of value for Rs 350! Much better than the other way around with these "shares of the day"nonsense. Please keep up the great work and thanks for sharing with us.

Friend have a look on CABO as well, they are related also they declared reasonably above return compare to the RENU, so have a look and let us know what do you thing about it?

OMG.. I had a glance at it and its a hell a of a lotta shares they have in their portfolio as investments.. It will take a quite sometime to analyse this..

smallville wrote:

Gaja wrote:

kiwi wrote:Smallville, great work. Its so refreshing to see some actual analysis for a change compared to what passes for analysis most of the time. I have never really paid much attention to this stock, actually to be honest I have not looked into to it ever! Thanks to your hard work, I was prompted to take a look. I think that you are spot on in identifying some significant value that is not being recognized by the market. I just love these chances to buy Rs 500 worth of value for Rs 350! Much better than the other way around with these "shares of the day"nonsense. Please keep up the great work and thanks for sharing with us.

Friend have a look on CABO as well, they are related also they declared reasonably above return compare to the RENU, so have a look and let us know what do you thing about it?

OMG.. I had a glance at it and its a hell a of a lotta shares they have in their portfolio as investments.. It will take a quite sometime to analyse this..

Hi Small

Great Analysis

Same things i did for few months back, this is great value stock for us to hold for life time.

http://forum.srilankaequity.com/t3190-renu-a-detailed-analysis-value-stock?highlight=RENU

Renu Annual Report - http://www.cse.lk/cmt/upload_report_file/569_1314702853575.pdf

Cabo Annual Report - http://www.cse.lk/cmt/upload_report_file/615_1314702698412.%20Annual%20Report%202011.pdf

AS per RENU annual report their portfolio is = 2,234,946,869
Investment on Hotel refurbisments = 128,000,000

Balance = 2,106,946,869

Investment per share = 2,106,946,869 / 7,000,000 = Rs. 301/-

So apart from hotel operations and Land revaluations which adds more value to its NAV, investment portftio alone gives u Rs. 301/- for a share you invest.

smallville wrote:AS per RENU annual report their portfolio is = 2,234,946,869
Investment on Hotel refurbisments = 128,000,000

Balance = 2,106,946,869

Investment per share = 2,106,946,869 / 7,000,000 = Rs. 301/-

So apart from hotel operations and Land revaluations which adds more value to its NAV, investment portftio alone gives u Rs. 301/- for a share you invest.

@smallville, thank you for the excellent working on Make-to-Market Valuation given on the top.

NAPS calculated at the Market Value; Rs. 301/-, is it the updated figure based on the portfolio as at 31/03/2011 (instead Rs. 514/- drive based on portfolio as at 31/03/2010) ??

MoneyLover wrote:

smallville wrote:AS per RENU annual report their portfolio is = 2,234,946,869
Investment on Hotel refurbisments = 128,000,000

Balance = 2,106,946,869

Investment per share = 2,106,946,869 / 7,000,000 = Rs. 301/-

So apart from hotel operations and Land revaluations which adds more value to its NAV, investment portftio alone gives u Rs. 301/- for a share you invest.

@smallville, thank you for the excellent working on Make-to-Market Valuation given on the top.

NAPS calculated at the Market Value; Rs. 301/-, is it the updated figure based on the portfolio as at 31/03/2011 (instead Rs. 514/- drive based on portfolio as at 31/03/2010) ??

Where have you got that from?!
As per data available in the Annual Reports, if RENU's Investments & Property are taken at market value,
The Net Assets per share was Rs 300.58 on 31-03-2010.
NAPS has increased to Rs 447.65 on 31-03-2011.