Saturday, March 25, 2017

PNE Industries (BDA.SI) - Finally hit NAV again.

PNE Industries (BDA.SI) - Finally hit NAV again

Hi everyone. A short update.

With the current run-up in our stock market, STI is now around 3150, back to 10% below previous recent highs of 3500, many small cap stocks have had a spectacular run up.

Since its full year results release, PNE Industries has not disappointed either. The share price has finally hit 96c. This is slightly below its NAV of 96.3c but considering the recent big dividend payout, its close enough.

As such I have started to pare down my holdings in this counter, recoup my capital and lock in gains whilst leaving some free shares. This will replenish my cash holdings and will add to my free shares holdings :D

Thank you Trump rally.

Monday, February 13, 2017

Multi-Chem Limited (AWZ.SI) - Full Year 2016 Results Update

Multi-Chem Limited (AWZ.SI) - Full Year 2016 Results Update

As expected a stellar financial year for Multi-Chem. Business is chugging along nicely. Revenue has been flat but profits remain robust. EPS this last quarter being boosted by forex gains of ~1m from USD going up and 1.4m or reversal of doubtful debt allowances.EPS for FY16 was 10.8c. A big dividend of 3.3c has also been announced. This brings payout ratio to 40% which is nothing to shout about but fair.

Of note,
1) debts have been halved pretty quickly from 22m+ down to 11.5m now. The company will be able to go debt free at anytime.
2) A recent sale of factory land in China for 8.3m should bring cash to 58m+ and net cash to market cap to 65%. Though this sale was only slightly profitable and NAV will not be getting a boost, it is good to see Mgt. might be looking to slowly exit this business, which is not contributing much at this point, and focus more on the new core business.
3) The recent insider buy in @ 52c after 3Q results last year shows that mgt. already knows good results were on the way.

The share price has reacted accordingly after this results release. Since covering this stock at 52c, price has moved up to 78c at close yesterday. Though on not much volume. Given that top insider ownership is pretty high, this is to be expected. IMHO it is very possible a privatisation could be on the way.

[author holds shares in this company]

Thursday, January 19, 2017

Memtech International (BOL.SI) - Making some Beats

Memtech International (BOL.SI) - Making some Beats

It's been almost 2 years since I started this blog with a first post on this stock. Much has happened since then. Memtech did well back then, stock price rose from 10c to over 15c(75c+ post consolidation) and then met with some hiccups and made some losses. Memtech has since done a 5:1 consolidation and share price has gone back down to the current 62cents (it did go down to around 55cents when announcing loss making quarter last year). Currently, there seems to be a loss of interest in the stock  from investors.

Memtech is now supplying plastic automotive components to world number 6 automotive parts company Faurecia (which makes car interior components). Faurecia makes interior parts for many major automotive companies, including Tesla. Memtech has been supplying Faurecia for the past year for Tesla model X and S. This year with ramp up of upcoming mass market electric car Tesla Model 3, it looks like there will be a flood of orders coming in for Memtech. Whilst Memtech is only making parts for the climate control system a.k.a aircon (those knobs and stuff you press) there will be avenue for memtech to branch into other parts as Faurecia provides solutions for all the interior parts and Memtech has expertise in Rubber/Plastics.

The other big boost Memtech could get is from its production of parts for major headset brand Beats by Dr. Dre. Apple bought this brand couple years back and Memtech has been making parts for their headphones. However there were some issues with Apple's cost cutting with a contract renegotiation that resulted in the poor results last year. Another popular brand for streaming movies with a TV plug-in stick called Roku has Memtech supplying it as well.

Memtech's most recent 3Q16 results are looking up though with EPS of 2.2 this quarter. Let's have a look at how the valuation stacks up BlueFund Style :

Market cap : SGD 87.346 million
NAV : $1.10
Price : $0.62 (45% discount to NAV)
Debt : 3.04 million (3.48% of MCap)
Net cash : 41.92 million (44.52% of MCap, this includes the $8m coming in from recent factory land sales.)
Dividend yield : 4.84% (based on about 3c past few years. Dividend policy of at least 30% payout)
Daily Volume : What volume? (my favourite type of volume :D)

Usually I try not to dwelve too much into the companies business. The sector the company operates in is more important most times. For memtech, automotive sector in China looks weak this year after sales tax on small cars were reduced last year to spur demand but have been put up again. However consumer electronics sector looks to be stable if not strong so memtech should be able to stay profitable this year.

Management is also trying its best to bring the company into the new-age. The transition of boss to his son should go smoothly as well. In view of this, it looks like an opportune time to start accumulating this now unloved stock. I do hope management looks to cheaper asian countries like Vietnam to move and diversify some of their production.

[author has shares in Memtech International.]