Thursday, June 29, 2006

Aloha: Owning a slice of Hawaii

BIL International [SGX listed: S$1.35, 29 June 06]

The key investments of BIL International ("BILI") are the group of Thistle Hotels, Molokai Properties, Bass Strait Oil & Gas Royalty and Denarau Properties.

Thistle Hotels group represents BILI's primary investment. It owns, leases and manages 49 hotels in UK. It is the largest full service hotel operator in London. BILI has shown that it is willing to engage in sale and lease back structures to lighten its balance sheet. For example, 6 hotels were sold and leased back for 185 million pounds in April 2005. The sale proceeds were used to repay BILI's bank debt. It also allowed the group to book a profit of approximately US$50 million.

Molokai is one of the several Hawaiian islands. BILI has reached an agreement with Molokai community leaders to develop 65,000 acres of land, representing 40% of the Molokai island. This land includes 13 miles of coastal land and BILI intends to reopen a 152 room Kaluakoi hotel that it purchased in an abandoned state in 2001. BILI is currently seek an investor to develop the coastal land.
BILI owns 55.1% of the royalty granted by BHP/ESSO which gives the holder 2.5% of the gross value of all hydrocarbons, liquid or gass produced and recovered in certain areas within Australia's Bass Strait. This royalty is monetised for the next 10 yers through the ASX listing Bass Strait Oil Trust (BSOT), of which 20 mil is held by BILI.

Denarau is BILI's wholly owned property company in Fiji. It owns Fiji's largest resort (Denarau Island Resort in Western Viti Levu, 650 acre) and is currently working on a new five star resort and a commercial retail project.

Analysis: BILI is trading near its net book value. The bulk of its assets comprise of hotels in London situated on freehold and leasehold land which is likely to be valuable. It is likely that BILI will engage in more sale and lease back transactions following the successful sale of the 6 hotels in April 2005. Any profits from such transactions will likely accure to its earnings as much of its debt has been paid off.

There is a potential earnings catalyst in the units of BSOT. The 10 year monetization of BSOT will expire in 2007 and all subseqently cash flows of the royalty will revert to BIL. Hence, from 2007, the contribution to revenue of Bass Strait is likely to approximately double to 24 mil. This translates to an additional US$0.88 per share in earnings. BILI has also keen on securing a casino license to operate a gaming venue in one of their London hotels. Future casino operations can be a boost to its bottomline.

Another noteworthy aspect is that its controlling shareholder, Mr LC Quek has been snapping up more shares in the open market. This is suggestive of improved fortunes for the group ahead.



Anonymous Anonymous said...


good to see that u're back.. market has been rather cruel, but for the value investors, it's the best time to accummulate again...

thanks for your good work... :)

11:51 PM  
Blogger Mr Market said...

Hi Anonymous, thank you for commenting. I've never really been away but have been busy with work and other commitments. Of course, investigating ideas take time and its only in leisure that I can pen down some of my daily stream of thoughts to share and evoke views from others on this platform.

Here's a quotation which is rather apt on the recent market movements: "Volatility is a symptom that people have no idea of the underlying value"
- Jeremy Grantham

Care to share your investing philosphy? Do you have picks to share or views on BILI? You could share them here or via email at

Look forward to hearing from you.

6:42 PM  
Anonymous Anonymous said...

hi mr market....

good to see you have some spare time to share your investing ideas... :)

i always come back here for your views on the market.. find that u're very knowledgeable.. personally, i think i have moved away from chasing the quick buck.. it has never proved to be rewarding over the long run.. u get more misses than hits..

right now, favour quality stocks, trading at a discount and sexy theme plays with good fundamental..

i try also to time the market with charts or TA... and only move into so called 'fundamental' stocks.. however, my definition of fundamental is often flexible.. been reading forums, books, broker reports... haven't been able to discern what is really good and what is bad...

i'm quite impressed by your knowledge and experience.. are you working in the industry? took CFA?

all the best in your investing!

11:13 PM  
Blogger Mr Market said...

Hi Anonymous

Thank you for your kind words. I had put up this platform to serve as a catalog of some of my ideas. Of course, I cannot, due to time constraints and restrictions, list down the whole gamut for all here. It is hoped that like-minded investors like yourself can share ideas and make thought provoking comments to some of my pieces.

I'm still learning and certainly cannot be labeled as "knowledgeable" by any stretch.

Incidentally, a few months back, I wrote a piece on the value of technical analysis and it provoked some discussion. You may find it in my archives if you are keen on my two cents worth.

I try to take a long term view to picks. Some picks need time to realise their value while some astonish me with their swift "ROE". In an upcoming column, I will write about a counter which took nearly a year to realise its potential and deliver yet another excellent return.

It's noteworthy that you are focusing on quality stocks which are trading at a discount. Such counters are hard to find. Do you happen to have identified any in the recent sell down?

11:40 PM  
Anonymous Anonymous said...

Hold the presses! Community opposition to BIL International's plans to develop 65,000 acres on the island of Molokai is escalating, including threats of legal intervention.

Molokai has a long history of resisting overdevelopment. Over half of its residents are native Hawaiians. They don't want their island to become another Waikiki, with minimal benefits to local residents. They plan to fight for their home.

11:20 AM  
Blogger Mr Market said...

Thanks, anonymous for your comment on the possible resistance from the natives of Molokai to redevelopment. We have not heard from BILI on this. On the contrary, news that is coming through for this counter has been positive - in that, they have made inroads to operate casinos in UK. However, will have to watch out for possible surprises from the Molokai angle.


5:58 PM  
Anonymous Anonymous said...

For more perspective on BILI's Molokai holdings, check out this website:

Last weekend, 400 people marched in protest against BILI's plan to develop 200 millionaire estates on the island.

BILI's annual meeting is on October 20 in Singapore. Wonder if any of those in attendance will have a clue as to how much opposition there is to the company's plans for the island of Molokai?

12:23 PM  

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