King George Financial is a micro cap company based in Vancouver. The company's primary business is real estate development. The company has a market capitalization of $14.8 million at its current share price of $0.375, and cash and cash equivalents of $23.4 million as of its last financial statement. That makes it a net-net trading at 63% of net cash as of the date on the financials.
The company reported two events subsequent to these financial statements that reduce this cash balance, as the company invested approximately $6.75 million in joint ventures to develop real estate in Singapore and Malaysia. The company has previously had success with real estate companies in Malaysia, so management is credible on this issue. Cash pro-forma for these acquisitions will still exceed the companies market cap.
The company also has $4 million of assets on its balance sheet for real estate under development. These assets are land in Surrey, British Columbia. One parcel is approved for development into high rise condominiums, and the other is in the zoning application stage. These land assets have upside value, and the company has the cash resources to participate in the development if they view it to be prudent. The company had one of these land ventures on the books in 1999, so significant appreciation above book value is possible.
The company is extremely illiquid, which can be considered a risk factor. In fact, when I put in a buy order, there was no "ask" price listed on the exchange. It took about a week for my limit order to fill. This is a situation that requires, limit orders, patience, and not investing money you might need on short notice.
Disclosure: Long KGF
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