20170518-中国银河国际证券-Conglomerates__Holding_Company_Discount_11页_736kb
报告摘要
Summary of Strategy Notes: Holding Company Discount Analysis
Core Content
This report analyzes four holding companies and their listed subsidiaries in the context of potential switching or pair-trade opportunities based on valuation discounts. The focus is on the relationship between parent companies and their subsidiaries, particularly the discount to the sum-of-the-parts (SOTP) valuation, which is used to assess whether the parent company is undervalued relative to its underlying assets.
Main Points and Key Information
1. Screening Criteria
- Market cap over HK$25 billion.
- Listed subsidiaries account for at least 75% of the parent's sum-of-the-parts valuation.
- Parent and subsidiary have a relatively long trading history.
2. Key Holding Companies and Their Subsidiaries
| Parent Holding Company | Listed Subsidiary | Discount to SOTP (%) | Notes |
|---|---|---|---|
| Melco International (200.HK) | Melco Resorts (MLCO.US) | 30.8 | Steepest discount; some investors cannot buy into US-listed subsidiary |
| Swire Pacific (19.HK) | Swire Properties (1972.HK) | 24.9 | Large discount on PBR and NAV; Swire-B discount to Swire-A is at historic high |
| Hang Lung Group (10.HK) | Hang Lung Properties (101.HK) | 17.2 | Discount to NAV is narrowing; stub value is less than 10% of SOTP |
| Great Eagle (41.HK) | Champion REIT (2778.HK) | 20.1 | Discount widened due to family feud; may not be attractive despite the discount |
3. Valuation Highlights
- Melco International: Traded at HK$17.98, with a 31% discount to SOTP. Its 51% stake in Melco Resorts accounts for 98% of its GAV.
- Swire Pacific: Traded at HK$74.95, with a 25% discount to NAV. Its 82% stake in Swire Properties accounts for 72% of its GAV.
- Hang Lung Group: Traded at HK$31.65, with a 17% discount to NAV. Its 82% stake in Hang Lung Properties accounts for 86% of its GAV.
- Great Eagle: Traded at HK$37.70, with a 20% discount to SOTP. Its 66% stake in Champion REIT accounts for 52% of its GAV.
4. Share Price Performance
- Melco International has outperformed its subsidiary in 2H16, and the share price hit a 52-week high.
- Swire Pacific has diverged from Swire Properties since 2017, with Swire Properties outperforming.
- Hang Lung Group has seen its discount to Hang Lung Properties narrow, indicating improved valuation.
- Great Eagle has underperformed this year, with a discount to SOTP widening, possibly due to family disputes.
5. PBR Analysis
- Melco International: PBR at 1.24x, still at the low end of its historical range.
- Swire Pacific: PBR at 0.5x, historically low, while Swire Properties is at 0.65x.
- Hang Lung Group: PBR at 0.57x, while Hang Lung Properties is at 0.7x.
- Great Eagle: PBR at 0.46x, historically low, while Champion REIT is at a 5-year peak.
6. Investment Recommendations
- BUY: Indicates a share price increase of >20% within 12 months.
- HOLD: Indicates no clear catalyst for change.
- SELL: Indicates a share price decrease of >20% within 12 months.
7. Disclaimer and Interests
- The report is for institutional clients only.
- No warranties are given regarding the accuracy or completeness of the data.
- The report does not constitute an offer or solicitation to buy or sell securities.
- China Galaxy International may have financial interests in the companies mentioned, including holding stakes of 1% or more of their market cap.
Conclusion
The report highlights the valuation discounts of four holding companies relative to their listed subsidiaries. Melco International and Great Eagle are currently trading at the steepest discounts, while Hang Lung Group's discount has narrowed. The analysis suggests that the current discounts may present opportunities for pair-trading or switching, but caution is advised, particularly for Great Eagle due to ongoing family disputes. Investors are encouraged to evaluate the situation further and consider consulting independent financial advisors.
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