Taken from 2014 AR. The bulk of loans are loans F and G which are in USD and depend on BBA libor rate. CMPH loans are all amortized
Assume 7.78 HKD to 1 USD and interest rate as what is stated in 2014 AR.
The amount of money to be paid over the next few years including interest cost are:
2016: 703 mio HKD
2017: 751 mio HKD
2018: 890 mio HKD
2019: 879 mio HKD
Capex for 2015 9M is the highest for the last 6 years, at 150 mio. Assume
A higher capex of 200 mio due to more expressways and the fact that Guixing is not fully completed. And that they need to pay 743 mio HKD. As dividends for the enlarged base
They need to generate OCF of 1.66 billion of HKD, and they need to add 100 mio for Q4. Not tall order.
2018 is the year they need to pay the highest loan. 890 mio. So they need an OCF of about 1.85 billion.
If we annualise 9 M 2015 results, OCF will be about 2 billion. So there is some buffer. There is excluding the 3 new acquisitions' contributions.
Assume interest rate increase by 1% in 2016( unlikely if u ask me), 2% in 2017 and normalized at 3% in 2018.
Repayments of loans will be:
2016: 731 mio
2017: 798 mio
2018: 941 mio
Assume HKD weakens by 10%, 8.85HKD to 1 US dollar
2016: 750 mio
2017: 810 mio
2018: 971 mio
Assume double whammy of strengthening USD and hiking of interest:
2016: 778 mio
2017: 857 mio
2018: 1.22 bio
If the company can generated 2 billion of OCF, it can still maintain dividends in the double whammy situation.
Hence, I think we should seriously worry more about the operating business than what many people are harping on, currency and interest hike.
I wanted to post this before their annual results so that readers can see for themselves what OCF they can generate for themselves with a quarter of contribution of 3 expressways.
If full year 2015 OCF hits 1.8 - 2 billion, I will sleep well.
If the tolls start falling due to economic slowdown (less goods transport around the country), I will study how big the fall is and decide if I will reduce or cut loss.