Nagacorp

Hi Chee Leong,
Few things you need to keep in mind pertaining to Nagacorp:
Its Naga Two project continued to be delayed and there’s hardly any news coming out of its casino development in Vladivostok.
However its revenue and profit continues to perform to expectations though no longer in the dizzying range like the previous years.
One thing you need to know is that the Chairman owns more than 70% of the stock and at each progress in the development he is obligated to sell his stake which could impact upon the price.
Its dividend yield is at 7.6% based on present price, which is quite good.
Still do not over invest in casinos stocks as the spending power of the Chinese has been limited by a series of capital controls in China. 
The monthly equity movement reports the movement of shares held by insiders or huge movement of shares held by investors that warrants the company to report to the public.
Hope this helps
 

Hi Ghee Wei,
Nagacorp has just announced that it will be converting US$260M owed to the chairman for the construction of TSCLK Walk into shares. So expect some dilution which will bring the share price down. 
So if you want in, you need to be patient for the development on this front.
Meanwhile the global market could experience a bout of uncertainty due to the political uncertainty in the US and looming budget fight in September.
As for the Vladivostok casino the comments was “broadly on schedule” which could mean anything. If it really is opening in 2019, the narrative would be “on schedule”. I see it as attempting to appease investors.
Most of the money has been funneled towards completion of Naga2 which has been delayed for 2 years. 
The conversion of the US$260M owed to the chairman is aimed towards the development of Vladivostok in my opinion. So until the money is hand, the development will not take place. Given the magnitude of the construction in Vladivostok, it will take more than 2 years, meaning a 2020 open. If a financial crisis happens in 2017 or 2018, the project will likely delay to 2021 or 2022.
However, it really depends on the management approach towards the project. During the financial crisis in 2008, Sands China spend even more aggressively to push the project through as costs were the lowest in a crisis.
I doubt Nagacorp will be a gung-ho as the Naga2 project has stalled mainly due to revenue not meeting expectations of strong double digit growth.
Hope this helps

Dear PC,
 
Thanks for your insight. The following link which is the schedule of the EGM on “PROPOSED CONVERSION OF THE TSCLK COMPLEX CONVERTIBLE BONDS AND APPLICATION FOR WHITEWASH WAIVER”.
The application actually mentions that the company NAGA Corp has acquired two companies from the founder Dr Chen, for USD 369 million. Which Dr Chen is offered the choice of either Convertible bonds or Convertible shares. 

1. TSC Inc. (USD 275 Million)
2. City Walk Inc. (USD 94 Million)

In the letter dated on 2011 on the proposed resolution, it was stated that the landscaping cost is USD 10 mil estimated for the tourist garden project and is included in the 94 million considerations.
On page 22 the project cost should be estimated to be 17.3 mil. So i wonder how the selling price of USD 369 mil is being derived which is around 21x of the project cost and i wonder how colliers the independent valuers has come up with the valuation of USD 409 million.
My worried is how aligned is the founder interest to shareholder interest. Would that be possibility of extracting wealth from existing shareholders? Its common for ASIA listed companies from siphon money from related company transaction. May i know whats your view on this?

Hi Chee Leong,
The major cost is the TSCLK complex which is a new hotel cum casino complex which is the Naga2 project.
The Citywalk Project is more than landscaping. It comes with an underground shopping complex. Here’s the layout plan. Link 
 
According to Colliers the completed Naga2 project is valued at US$3,128,000,000.
However, the arrangement is such that Nagacorp never has to incur financial costs through debt issue which is the norm in the industry. On the other hand it gives immense opportunity for the chairman to reap his investment rewards as the share price was based on a much lower moving average before the start of the project and as the project nears completion, has gained much higher in price.
If fully converted shares the chairman holding will be close to 79% if I remember correctly and he must dispose of them within a stipulated time to less than 70%. In such an event I would anticipate he would look for institutional support rather than dumping more than 9% of the shares in the market.  
Nevertheless, it pays to see how the development unfolds rather committing a purchase now.
Hope this help clarifies.