||EPS - Basic
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Real-Time news about Hemisphere Prop (London Stock Exchange): 0 recent articles
|torabora: Look out for new finance director, this should add 1p to the share price.|
|pylewell: I am a shareholder in Hemisphere and thought it would be of interest to repeat some of the detailed information sent to me last August by stockbrokers Pacific Continental. The report it's taken from is dated 5th July 2005. -
Hemisphere Property represents an opportunity to invest directly in the growth potential of China through property and property development. Having contracted to sell most of its earlier UK property investments the company's current and future prospects are focused on its prime property and property development interests in the city of Lanzhou. Asset value per share appears to be significantly high after the fall in value of the share price following readmission to AIM.
....China has begun a process of rapid economic growth that looks highly likely to continue into the long term future. ..... The demand for property will inevitably be part of that massive economic growth in China. Hemisphere provides investors with an opportunity to participate in such development through its property assets acquired in Lanzhou, the provincial capital of Gansu province. Gansu, through which the commercially important Silk Road passed, is an economically important Western province of China. One of its major industrial activities is mining and mineral treatment. It is China's richest source of Nickel. Other metals mined here include platinum, magnesium, and alumina, palladium, copper and zinc. That makes Ganzu central to the manufacturing thrust of the fast growing Chinese economic activity. ....
The company states that it has planning consent for retailing, apartment and commercial development. A director expressed the opinion that property in Lanzhou has not overheated as in other places like Shanghai. One of the 3 Chinese directors is, I am informed, an inhabitant of Gansu and Lanzhou, posessing valuable local contacts and knowledge
.... In May 2004 there followed a major geographical departure with the acquisition of property in the Gansu province of China. This was a large investment costing 35.64m GBP satisfied with the issue of 584 million shares. It included property development rights. In this deal, Uniplan Assets and Fu Keng ventures were purchased from International Operations Ltd(IOL), a company in which the Chairman of Hemisphere, Desmond Bloom reportedly owned 41% of the equity. Another Hemisphere director owned 2.4% of IOL equity. The acquisition brought in 3 new Chinese directors including the current Deputy Chairman Chan Yim Sang. The others were named as Zhan Chun Hu and John Ho.
Desmond Bloom, who established Hemisphere, has confirmed the following facts about this Chinese investment..... The Hemisphere property is described as 10 story high building in a prime location opposite the Bank of China building in Lanzhou. The bottom 4 floors are leased under a single lease and rented to retail outlets serving the growing and increasingly wealthy inhabitants of the city . The current plans are to develop the top 2 floors into a large leisure, night club, and restaurant complex overlooking theHonzhu. He stated that it represents the opportunity of generating 1.0mGBP profit on an investment of 1.5m GBP. There is also planning permission for an additional tower block on the site to contain a 500 room plus five star luxury hotel - the city's first such hotel. Richard Ellis the UK property consultants reported. I am informed, that this development is capable of producing 17m GBP profit to Hemisphere. I understand that the plan is that Hemisphere will either develop the property with a partner or sell it outright for profit. I understand that talks have taken place with two interested hotel companies. Furthermore, there is approximately 8 acres of adjacent property which may be developed in the future. Desmond Bloom also informed that lengthy due diligence had been undertaken by City solicitors Field Fisher Waterhouse. Hemisphere has the equivalent of a forty year leasehold, in the form of a land use certificate. About the same time Oakridge, North London, was purchased as another related party acquisition..
There are 700M shares in issue. At 1.75p per share, that gives Hemisphere a market capitalisation of 12M GBP and stands at a dramatic discount to the 38M GBP of shareholders funds, largely but not wholly, reflecting the cost value of the Lanzhou property, shown in the balance sheet. That suggests that shareholders of Hemisphere own assets attributable to them worth around 5.5p per share. Put another way, for each share investors acquire 5.5p of balance sheet assets. That is a highly unusual equity opportunity. The share price of most companies are normally expected to be higher than the attributable shareholder attributable balance sheet assets per share. It is also to be noted that the price paid for the Chinese property interests 35.64M GBP values each share at 5p. In other words, if this was an objectively priced deal, it alone is worth an estimated 5p a share based on on 700M shares in issue. Moreover, the Chinese currence is regarded as significantly undervalued at present. The US administration is putting enormous pressure on China to revalue its currency. So on that basis it appears that this is an overseas investment that carries no significant downside risk. If the currency is revalued, which looks a strong probability, the value of Hemisphere's Chinese assets will rise in sterling terms accordingly.
.... Valuing the shares on the Chinese property at cost and assuming that a succesful development of the proposed luxury hotel produces a profit of 17M GBP, then the estimated near future value of Hemisphere is around 7.45p a share, around 3 1/4 time higher than the recent depressed share price of 1.75p. That will appreciate automatically as a result of any re-evaluation of the Chinese currency.
With the sale of the UK properties to bring in liquidity, the short term position of the company's finances looks to be now stable. That seems to be likely given that the new chairman, appointed this month, 63 yr old Michael Shields, is a former senior banker from UK Standard & Chartered Bank where his 30yr career included experience of Asia, Australia, and US and most recently, responsibility for special developments. Chinese director John Ho becomes Chief Executive. A new Finance Director is being sought. The recent suspension and the reason for it have caused the shares to fall to a level which look far too low in relation to the estimated value of the company's current and potential asset value. The board has been reinforced by a reassuring appointment of a new Chairman all of which makes the share look like a rational, significantly undervalued speculative investment.
Although Hemisphere is now focused on the commercial development of only one property, partly let, any risk associated with that is fully compensated for by the extremely low valuation of the assets. The balance of risk and reward appears to be notably in favour of reward. This is not a fully or overvalued prospect. The shares look good value on that basis.
Extracts from report compiled by Robert Sutherland-Smith, Independant Analyst.|
|torabora: Now that gets rid of 95% of punters and lowers the share price to under 1 pence. Great so I can buy cheap!!!|
|pylewell: Anyone know what is going on with this company? Share price keeps dropping|
Hemisphere Properties share price data is direct from the London Stock Exchange