Investment Thesis
Great Eagle Holdings (OTCPK:GEAHF) is a Hong Kong based real estate company, primarily concerned with the ownership and operation of hotels. The enterprise currently looks extremely undervalued on the basis of assets and moderately undervalued based on cash flow. When considered in combination with the fact that the company has a durable and long-term oriented business model, I believe this is a very worthy investment opportunity.
A Portfolio Of Hotels
(Image Source: Langham Hotels International)
Great Eagle Holdings is the owner of Langham Hotels International, a luxury hotel operator. It holds a geographically diversified portfolio of hotels operated under the Langham brand, including the Langham Hotel in London (opened in 1865) and The Langham on Fifth Avenue, New York. Among its other properties are Canada's largest hotel, The Chelsea Hotel, in Toronto and the recently opened Cordis in central Shanghai.
The company is structured in such a way that the majority of the hotels it owns are viewed as part of Great Eagle Holdings' Hotels Division (consisting of 11 hotels) though three hotels are also included on the company's balance sheet as part of its 62.4%-owned subsidiary Langham Hospitality Investments (LHI). Confusingly, most of the hotels within the company's Hotels Division use the Langham brand name though are not owned by the Langham subsidiary.
A number of smaller hotels are also owned by the company but are included in the balance sheet as development projects as they have not yet been opened. Upon opening these will likely be assigned to the company's Hotels Division. In total, hotel operation through both LHI and the Hotels Division is responsible for around 62% of Great Eagle's revenue and 38% of operating income.
Other Businesses
Operating hotels is by far the largest source of the Group's annual revenues, though investors should certainly be
