K. Wah International Ready For A New Stage

Analysis, Slider 25 Jul 2014
K. Wah International Ready For A New Stage

K Wah Group is an unlisted multinational with property development, entertainment, leisure resort, hospitality and construction material business spanning South East Asia and the US.

These include Galaxy Entertainment Standford Holes inl, KWAH Construction, Standford Hotels Corp Cresleigh Homes Corp in the US. According to Forbes total assets owned by founder lui reached US$2bn at the end of 2013.

KWAH International is the property flagship of the group and one of the growing  numbers of Hong Kong Developers focusing on on high end niche products with a strategic focus on three major cities, Hong Kong, Shanghai and Guangzhou.

It was recently made the focus of a financial report by Macquarie which described KWAH as a growing small cap Hong Kong developer which has made several key strategic moves since 2012 including,

a sufficient and balanced project pipeline; consistent dividends of HK$0.15 per share; improving asset turnover and a gradual increment of recurrent rental income that will  materialize early in 2015, which will be followed by more sustainable earnings growth, the report by Macquarie viewed KWIH as a value stock with 90% GAV exposure in Hong Kong and tier-1 cities in China.

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Source: Companydata, Macquaire research, 2014

In addition Macquarie expected Galaxy Entertainment Group (“GEG”) (stock code: 027) to be the major share price driver before the ramp-up of KWIH’s residential property business, giving it a clear road map for its short, medium and long term development.  Macquarie issued an Outperform rating on KWIH, with the target price at HK$6.39

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Source: Datastream, Macquaire research, 2014

Macquarie, expects contracted sales to rise from HK$4.8b in FY13 to HK$5.9bn FY14E and HK8.8bn in FY15E.  The balance sheet looks relatively healthy with end -of-year net gearing at 33% in 2014E (14% in 2013).




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