Tahoe Group: Dah Sing Life acquired; now bolstering efforts to take AIQ private
Tahoe Group (TAHO) is among the 222 Chinese stocks that are part of the MSCI’s simulated list of constituents for inclusion into its Emerging Markets Index (EEM) (VWO), in 2018. The Chinese real estate company, is also engaged in the provision of financial, insurance, and investment services in China (FXI) (YINN) (MCHI). The company recently completed the acquisition of Dah Sing Life Assurance Company Limited and Dah Sing Insurance Services Limited (collectively Dah Sing Life), to include high-end life insurance into its product offerings.
The company is also in the midst of an attempt to acquire the NASDAQ-listed Chinese medical services outsource company Alliance HealthCare Services (AIQ), as it plans to take the company private. As of early 2016, the company owned 51.5% of AIQ.
| Security Name | Ticker | Mkt Cap ($bn) | Fwd EPS | Fwd P/E | Analyst Rating | Sector- Industry | YTD Return |
| Tahoe Group Co Ltd A (TAHO) | 000732 | 20.83 | 2.12 | 6.9 | 4.8 | Real Estate- Mgmt. Development | -4.3% |
| Data as of date June 19, 2017, Returns as of July 3 | |||||||
The news of this Chinese company potentially going from listed to private status is running alongside another where a Chinese company is attempting to list on the US exchange. Alibaba-backed Best Logistics has filed for a $1 billion New York Stock Exchange listing, aiming for the biggest US float of a Chinese company this year. Alibaba (BABA) holds a 23.4% stake in Best Logistics.
Tahoe is invested in property from the US to the UK
Over the past few years, Fujian-based Tahoe Group has expanded aggressively in larger cities in China, mainly by selling units built on commercial and office land. However, with the government ban on commercial flats being sold to individuals, sales have slumped for the company.
The company is also active in forming associations with investment and real estate funds, abroad. According to a special announcement released (in Chinese) by the Board of Directors of Tahoe Group on June 28th, the real estate company completed an acquisition of an investment firm on June 21 [ as translated]. An earlier release of the company indicated its plan to acquire 23.32% of Beijing Science and Technology Park Construction Co. for $25.8 billion (175 billion yuan).
In a June 7th announcement, the company announced its $10 million investment in CITIC Capital YBI Fund. The company’s total commitment to the fund, which is involved in a residential development project in San Francisco, United States, stands at 15.30%. In January, the company joined the CITIC Capital London Mayfair Property Fund as a limited partner by investing $44 million. The fund is in involved in a residential development project in London.
Valuations
The Shenzhen-listed stock 000732 is down 4.3% YTD (as of July 3). Over a 5-year period, however, the stock has returned 20.4% on average. On a relative basis its blended forward P/E stands at 6.9x, while the mean of blended forward P/E’s of its competitor group (including Tahoe Group) equals 10.2x. The stock is therefore, trading attractively as compared to its competitors.
Consensus analyst ratings hold the company at a 4.8 score with 100% of analysts extending a BUY recommendation on the stock.
