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Nam Tai Electronics, Inc. Message Board

  • lizheng19672002 lizheng19672002 Jan 31, 2013 11:44 AM Flag

    Question about value of land

    I agrees on the math regarding the value of this raw land which is worth about 900million to about 1.2 billion. However, why this is not shown in the balance sheet? Thanks.

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    • Agreement with crosscourt, and in fact there are a couple other reasons also:

      It's actually carried below cost now, due to depreciation, so the value on the books is negligible.

      They haven't had appraisals yet, so even if they wanted to carry it at maket value, they don't know the market value. Until recently it wasn't worth this much. It was worth a lot because of the growth of Shenzhen, but then the creation of this special economic zone and the rezoning of the land multiplied the value last year. Among other benefits to this land, qualifying companies can get 15% tax rate instead of the usual 25%. That alone is obviously a huge deal, nevermind being in a massively populated area, right next to Hong Kong, 6 miles from Shenzhen's airport, and sitting on a highway.

      Sentiment: Strong Buy

      • 1 Reply to jaretwilson
      • Jaret:

        I don't think land is depreciated. There may be some type of allowance as it is actually a long term lease. I believe there is 30 or 31 years left on it....

        I wonder how that will impact the value?

        Will the PRC give an extension of the lease maybe if it sold? At time of sale give the buyer a 20 year option after original lease runs?

        I don't know. Anybody know anything about land leases in mainland China?

        Anybody?

        Sentiment: Strong Buy

    • Long-term assets are carried at cost.

 
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