Ceiba’s first results show Trump impact – Ceiba Investments has published its first set of results since listing in the UK. Aberdeen Standard Investments paid the company $5m to buy the management contract. How this deal is treated in the accounts distorts the figures – either it is recognised straightaway or the accountants spread the money over the five-year term of the management agreement. We will use the time-adjusted figures but it is worth remembering that the NAV and this year’s earnings would be higher otherwise.
We wrote a note around the time of the IPO that you might be interested in – Unique access to Cuba
The NAV return for the period was -4.2% and the NAV at the end of December 2018 $1.49 or 117.7p (that compares to a share price of 92p yesterday – a 22% discount). Dividends of 4.9p have been declared, putting it on a 5.3% yield.
The company lists its major achievements since the IPO:
- “we successfully concluded the merger of the two Cuban joint venture companies through which we hold our interests in four operating hotels in Cuba, with extended ground leases to 31 December 2042;
- we repaid a €30 million (approximately US$34 million) bridge loan that was outstanding; and
- the Toscuba joint venture commenced construction of a new 400 room beach resort hotel on prime beach-front property next to the historic town of Trinidad, on the southern coast of Cuba.”
Cuba’s economy grew but slower than forecast. “2018 proved to be a difficult year for Cuba, with GDP growing by just 1.2%, below the 2% figure that was originally forecast by the Cuban government. During the year, the headwinds faced by the Cuban economy included the after-effects of the extremely powerful and catastrophic Hurricane Irma in September 2017, the political turmoil and financial collapse of its strategic ally Venezuela, and the strengthening of travel restrictions and other measures by the Trump administration. The latter had a strong impact on individual travel from the U.S. to Cuba in 2018.” Tourist arrivals were up on the year as more cruise ship passengers made up for lower tourist arrivals from the US. However, cruise ship passengers have no need of Ceiba’s hotels. This seemed to hit the occupancy and room rates at the Meliã Habana Hotel in particular, which had already been impacted by Hurricane Irma in late 2017.
One notable positive development was an agreement by the governments of Spain and Cuba to establish a debt conversion programme that will benefit two of the joint venture companies in which Ceiba has an equity interest.
CBA : Ceiba’s first results show Trump impact
CBA : Ceiba’s first results show Trump impact