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Macau Property posts strong growth

RESULTS: Shares in this Macau property developer are trading at a huge discount - and for no good reason
September 24, 2012

Macau Property Opportunities (MPO) is showing no signs of being affected by the gaming slowdown in Macau or the property correction in China. Its portfolio was marked up 15.8 per cent over the year, driving strong growth in net asset value (NAV) per share.

IC TIP: Buy at 109p

The fund's largest asset by far is The Waterside, a tower in an ultra-posh housing development called One Central Developments. Occupancy reached 86 per cent by end-June, up from 69 per cent six months before, helped by the launch of eight premium suites in February. The $180m (£110m) asset rose by a modest 6 per cent in value over the year, but Tom Ashworth, director of the fund's manager - Sniper Capital - says rents are rising faster, so growth could accelerate. The portfolio's other properties all posted double-digit growth - including a big mall development that's being delayed by Macau's Byzantine planning process.

Mr Ashworth says he won't invest in new projects unless they offer returns in excess of the 41 per cent discount to NAV at which Macau Property's shares currently trade. Some 800,000 shares were purchased and cancelled during the year, too.

Broker Liberum Capital expects adjusted NAV of 208p for 2013 (from 194p in 2012).

MACAU PROPERTY OPPORTUNITIES FUND (MPO)

ORD PRICE:109pMARKET VALUE:£109m
TOUCH:109-110p12-MONTHHIGH:120pLOW: 99p
DIVIDEND YIELD:nilTRADING PROP:$64.9m
DISCOUNT TO NAV:41%
INVESTMENT PROP:$225mNET DEBT:30%

Year to 30 JunNet asset value* (¢)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (p)
2008281-17.8-16.9nil
2009225-15.2-14.5nil
201025047.645.4nil
201127236.534.8nil
20123016.035.88nil
% change+11-83-83-

Ex-div: -

Payment: -

*With inventories revalued to market value

£1=$1.63