Vincent Lam presented his in-depth investment thesis on Hainan Meilan International Airport (Hong Kong: 357) at Wide-Moat Investing Summit 2013.
The Bottom Line: Owns airport located in the northern part of Hainan island off China. To benefit from China’s rising middle class and increasing frequency in passenger air travel. Moat due to: 1) natural aviation oligopoly due to island’s location and Sanya Phoenix Internatonal Airport being the only competitor in the region (also, Hainan Meilan owns a 16% stake in Sanya); 2) natural duty-free shop oligopoly: operates one of only two duty-free shops in Hainan (entrants banned by regulations); and 3) healthy financials: net cash and high free cash flow. Trades at 1.1x P/B and 8x 2013 P/E (5% dividend yield) and 5.5x EV/EBITDA versus Shanghai International Airport (1.5x P/B, 13x P/E, 7.8x EV/EBITDA), Beijing Capital International Airport (1.1x P/B, 12x P/E, 7.2x EV/EBITDA) and Guangzhou Baiyun Airport (0.9x P/B, 8x P/E, 3.7x EV/EBITDA).
About the instructor:
Vincent Lam is the Founder and Chief Investment Officer of VL Asset Management Limited, which seeks to grow investors’ wealth using its “value-investing with catalysts” strategies and tested stock selection skills. Vincent has close to 20 years’ experience in financial analysis and research and portfolio management in the Hong Kong and China stock markets. Prior to forming the current company, he was Managing Director of Ramius Capital Asia Limited, responsible for their Asian event-driven portfolio. Before Ramius, he served at Quam Asset Management Limited as Chief Investment Officer. Vincent has written several books on value investing in the Chinese language and was a guest lecturer at the Open University of Hong Kong teaching a course on value investing. He is one of top five money managers featured in the book titled Money Masters written in 2005 by Tony Choi, a veteran investment and business executive in Hong Kong (the other managers described include Mr. V-Nee Yeh of Value Partners). Vincent has an EMBA degree from Richard Ivey School of Business, Canada, and a Bachelor’s degree in SSc (Economics) from The Chinese University of Hong Kong.
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