RENU - Investment portfolio value

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.

All investment trusts seem to do well.

Antonym wrote:

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.

Thanks Antonym,

I just asked smallville about his workings. He has estimated market value of RENU's portfolio by Aug-2011 based on portfolio held as at 31/03/2011 (before Annual report released) and estimated NAPS was Rs. 514/- (see the top).

Then I asked about his latest figure of Rs. 301/-. I guess the Rs. 301/- was the market value (Aug 2011) of the portfolio based on 31/03/2011 but without adding property value.

Antonym wrote:
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.

Dear Antonym,

Appreciate if you would tell us where you found the figures given??

As per the June-2011 reports NAPS is Rs. 258.90 (as per Annual report data NAPS as at 31/03/2011 was Rs. 233.76) and No changes in accounting policy.

Also as per the Notes 7.2 and 7.3 to the accounts, appeared in the Annual Report 31/03/2011, Property as well as Investments are stated at COST (and NOT at Market Value as you mentioned)

MoneyLover wrote:

Antonym wrote:
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.

Dear Antonym,

Appreciate if you would tell us where you found the figures given??

As per the June-2011 reports NAPS is Rs. 258.90 (as per Annual report data NAPS as at 31/03/2011 was Rs. 233.76) and No changes in accounting policy.

Also as per the Notes 7.2 and 7.3 to the accounts, appeared in the Annual Report 31/03/2011, Property as well as Investments are stated at COST (and NOT at Market Value as you mentioned)

This is to explain how I have calculated 'true market-price NAPS' as on 31-03-2011, based on figures in RENU's Annual Report 2010/11 (Pages 26-27):

(1) As MoneyLover has rightly pointed out, Land & Buldings (Rs 129.6 million) and Investments (Rs 836.1 million) are shown at Cost in the Balance Sheet.

(2) However, the true market values of L&B and Investments were much higher: Rs 226 million and Rs 2,237.3 million respectively.

Deducting values in (1) from values in (2), the extent of understatement is Rs 1,497.7 million = Rs 213.95 per share (i.e. Rs 1,497.7 million divided by 7 million shares).

NAPS based on Cost is Rs 233.70 (See Page 32 of AR). Adding Rs 213.95 + Rs 233.70, you get 'true NAPS' of Rs 447.65 per share.

Thansx guys for your valuable information (specially for smallville and Antonym). RENU is one of my favorite and part of my long term investment. I always consider RENU as an investment firm which has a hotel.

Still I couldn't read the annual report as I am enjoying my vacation.

MoneyLover wrote:

Antonym wrote:

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.

Thanks Antonym,

I just asked smallville about his workings. He has estimated market value of RENU's portfolio by Aug-2011 based on portfolio held as at 31/03/2011 (before Annual report released) and estimated NAPS was Rs. 514/- (see the top).

Then I asked about his latest figure of Rs. 301/-. I guess the Rs. 301/- was the market value (Aug 2011) of the portfolio based on 31/03/2011 but without adding property value.

As I mentioned earlier, apart from hotel operations and Land revaluations, asset-liabilities calculations, investment portftio alone gives u Rs. 301/-for a share you invest.
So its just the value of investment portfolio that is 301..

I'm yet to revise this as the market value of the portfolio in latest AR differes from my calculations due to changes in share quantities and their new investments/ disposal. So I'l re calculate this and update As soon as I can to avoide further confusions

OK.. I've updated the calculations again as per the 31-08-11 AR...

smallville wrote:OK.. I've updated the calculations again as per the 31-08-11 AR...

thanks for the hard work and spending your most valuable time for us.

Well impressed.
Thanks a lot.

sriranga wrote:Well impressed.
Thanks a lot.

I am wondering why Renu is going down. considerable amounts sold at 270.

This hotel's portfolio has been posted so many times in every forum.
Net asset value is important only if the company is planning to sell everything and close the business. Otherwise it's a waste of money like held under the mattress. Think about it this way. You make them into money when you need to repair the hotel. So it's like keeping the money in the bank. Taking out when needed. This assets are just hanging there not used for adding value to the core business.
But for a business is that what you want? No. A good business won't store money under the mattress. Either they have to put the money into some business or It's much better to sell all the extra assets and distribute the money to the shareholders. That's not going to happen.
Looking at the assets is like the grandmother taking the old inherited items out of the old cupboard, looking at them and and hiding them away again.

ipoguru wrote:

I am wondering why Renu is going down. considerable amounts sold at 270.

Probably because they have been siphoning off surplus funds to a related company in Australia, instead of distributing it to shareholders.
("Company has granted a loan amounting Rs. 325,551,194 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 30th March 2019. A first ranking fixed and floating debenture charge over all of the undertakings of the borrower is the security to this loan.")

It would have been nice if Ravi Thambiayah & Co. had been a little more considerate towards minority shareholders.

Antonym wrote:

ipoguru wrote:

I am wondering why Renu is going down. considerable amounts sold at 270.

Probably because they have been siphoning off surplus funds to a related company in Australia, instead of distributing it to shareholders.
("Company has granted a loan amounting Rs. 325,551,194 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 30th March 2019. A first ranking fixed and floating debenture charge over all of the undertakings of the borrower is the security to this loan.")

It would have been nice if Ravi Thambiayah & Co. had been a little more considerate towards minority shareholders.

Yes, it is rather concerning to know at this stage that all they could do with a Rs 325 Million is to lend it as a loan to get a 5-7% return per annum. Can't they think of anything better to do with money like that.

Well, atleast for the hotel earnings itself ( without portfolio), the share is trading at near fair value compared to its sector which is still overvalued.

aj wrote:This hotel's portfolio has been posted so many times in every forum.
Net asset value is important only if the company is planning to sell everything and close the business. Otherwise it's a waste of money like held under the mattress. Think about it this way. You make them into money when you need to repair the hotel. So it's like keeping the money in the bank. Taking out when needed. This assets are just hanging there not used for adding value to the core business.
But for a business is that what you want? No. A good business won't store money under the mattress. Either they have to put the money into some business or It's much better to sell all the extra assets and distribute the money to the shareholders. That's not going to happen.
Looking at the assets is like the grandmother taking the old inherited items out of the old cupboard, looking at them and and hiding them away again.

Good thinking.. The company is not selling it to another party or closing down But why we're interested in it is; the company has a back up plan to earn money. i.e. the hotel was closed for refurbishments and still they cover up the costs with this..

What I think of their investments is; just as u put money in another business venture, share trading is also an investment, why we put our money is cuz if that rite? So whenever necessary they earn from it, use it as an alternative financing method, i.e. for refurbishments, they used invested money + bank draft while they could've easily gone for a right issue

Minorities are not taken on rides in these kinda companies..
I think RENU as an Investment trust + Hotel

near term upside would be to sell off at 306rs from current price.

I am really appreciate you & I am highly impressed
Thanks a lot.