Namlee Pressed Metal - The Carrier Man can

Namlee Pressed Metal (G0I.SI) - The Carrier Man can 

For this month, I have decided to do a post on Namlee Pressed Metal (current price 0.315).

NPM used to be located near a hot spring and the SAF yacht club in the Senoko industrial area, near those 3 pretty candlesticks which our friends across the causeway love looking at. It has since moved to the other side of the island, to Sungei Kadut industrial area near to King Wan's offices.

This has been a pretty boring and old family business. As usual it is run by a pretty old family and has been involved the metal products business in Singapore for god knows how many years. Well to be more exact, it is run by the Yong family, who had been  involved in the metal products fabrication business since the 1950s, incorporated in 1975 and listed on Singapore Stock Exchange (SGX) main board October 1999.



Revenue comes mainly from two places with about half from each on average.
1) The building products business supplying to the housing sector in Singapore and 
2) Aluminium frames for container refrigeration units

The main attraction for Namlee would probably be the aluminium frame business. It makes these frames for non other than leading world class Carrier group. Yep the one with "The carrier man can...) jingle we used to watch on TV trying to sell Carrier aircons. For starters, doing business with a global group like Carrier means so long as the relationship maintains its status quo, NPM has exposure to the worldwide container market with a company that has a sizeable moat. We can view this business as pretty constant and resilient, with okish margins.

Let's look at some current valuations in simple BlueFund fashion.
Market cap : 76 million
NAV : $0.498
Price : $0.315 (37% discount to NAV)
Net cash :  33 million (43.46% of Market Cap)
Dividend yield : 7.94% (based on 2.5cents, historically has been 1cent plus some bonus)

Namlee used to have a lot of cash last year (>60% Mcap) but quite a bit has been used for CAPEX, with a new factory set up in Malaysia, moving to its new lease-hold premises which it bought from JTC (this will save on rent cost) and ramping up of inventories as new orders come in. So it now has offices in SG but production factory in Malaysia, good combo.

Now that things are set up nicely, going forward, it is very likely that profits will continue to roll in and Namlee will become a nice and proper cash cow. Already this year's EPS is 5.35cents with a nice fat bonus div being paid out. With the Baltic Dry Index for shipping at multi-year lows, any rebound in the shipping scene will see a sharp rebound and pile up of orders and profits for NPM.

[author holds shares in this company] 

Oil prices are going Goin' Down For Real

Oil prices are going Goin' Down For Real (G.D.F.R)

Remember the trading frenzy and sudden big jump in oil prices in 2011 when Libya was having the "crisis" what with the arab spring coming and all that Gaddafi hoohah? The country plunged into civil war and their production tanked from 1.6+million bpd to nothing. Things have since improved somewhat since then and Libya is now pumping around half million bpd a day. That's not much, but at least it's contributing to the excess in global oil supply.

Let's cast our eye on the bigger fish. OPEC led by Saudi Arabia has been on a pumping spree and with increased production looks like it is on track to finally beat the crap out of America's shale players.

However, the biggest thing to consider on the supply side would be IRAN.

The Iranian angle : 
Exports of crude and condensates have been cut from 2.6 million bpd in 2011 to 1.4 million bpd in 2014, according to the U.S. Energy Information Administration. However Iran produced average of 3.6million bpd(barrels per day) last year (BP Statistical Review of World Energy 2015) and probably sold the excess via back channels to countries like Turkey and India which buy oil with gold. And back in 1974 before all the wars and sanctions they were doing 6million+bpd/day.

Just wait till the nuclear inspection thingie is done and Iran starts officially and properly exporting oil internationally again early next year and ramp up production. They are already inviting overseas majors to invest. They should easily hit around 4 million bpd if not more with plenty of untapped oil reserves and new investment coming in. Not to forget their natural gas reserves are humongous as well which will impact the LNG market prices and supply.

Iran's addition to the global oil supply glut will more than make up for any drop in Shale production from the Americans. "Barring any unforseen circumstances" , expect another race to the bottom for oil prices pretty soon.

[author is not vested in any stocks with any relation to O&G sector. Oh and also property sector.]

STI below 3000 points, it's been a while.

The STI going below 3000 points has not happened for a while now. It's been almost 4 years since it corrected at a similar time in 2011. Whew time does fly.

Still can't believe markets did not correct after the end of QE3 last year. Expected that the end of QE3 would herald the same market reaction as when QE2 ended. Well looks like history sometimes doesn't repeat itself. The only explanation would be that as QE3 ended, both Japan and European central banks started their own QE like programs. This could have maintained the global liquidity that was flowing into stock markets.

However this time round, it does seem like the imminent raising of interests rates by the USA FED is having an effect on markets. That together with economic data showing a slowdown in China, contraction in Japan and not much recovery in Europe, is probably causing a flight to safety, namely the USD and Gold.

So what's so great about STI going below 3000 points? 
For the value investor, as stocks fall, more and more value emerges. Especially when sharp drops happen in a short space of time and fundamentals of companies remain not too bad, if not unchanged. It also means previous stocks which may have risen to fair value and profits taken are now once again showing attractive valuations. On a larger picture basis, an investor who has taken profits when markets were high, now has a chance to deploy his cash back into the market. As it is almost impossible to time the bottom during a stock correction/crash, a simpler approach would be to just mechanically allocate capital into the market as it retreats.

At the rate things are going, STI seems like it will be doing a repeat of 2011. Currently it is off from peaks of 3500 by >10% already and might be down 20% pretty soon. It seems that most of the market action of blue chips selling off seems to be due to fund outflows by ETFs tracking the emerging markets. Looks like for now, the confidence in emerging markets has been lost and it might take a while before confidence is restored.

CDW Holdings - Brightening your Sharp screens

CDW Holdings (D38.SI) - Brightening your Sharp screens

For this month, I have decided to do a post on CDW Holding Limited (current price 0.192). [CDW is a Hong Kong-based investment holding company. The Company focuses on the production and supply of niche precision components for mobile communication equipment, gamebox entertainment equipment, consumer and information technology equipment, office equipment and electrical appliances. The Company operates in three segments: LCD backlight units, Office automation, and LCD parts and accessories. LCD backlight units segment is engaged in the manufacture of liquid crystal display (LCD) backlight units for LCD modules. Its Office automation segment is engaged in manufacture and trading of parts and precision accessories for office equipment and electrical appliances. Its LCD parts and accessories segment is involved in manufacture and trading of parts and precision accessories for LCD modules.

This Japanese controlled company (>50% owned by MIKUNI CO., LIMITED), operating out of Hongkong but listed on SGX has been around for quite a while. It has also been rewarding OPMI with steady dividends for quite a while. Recent half-yearly results shows that they will be doing their USD0.5c interim div payout. Earnings have also been good so far at USD1.22c for this quarter and USD1.55c for first half. It seems the investment they made previously for a new factory production line for backlight units has been profitable, though revenue has declined a bit compared to same quarter last year. Once again let's have a quick look at it's overall current valuation, in simple BlueFund fashion.

Market cap : 93 million
NAV : $0.205
Price : $0.192 (7% discount to NAV)
Net cash :  85.57 million (72.04% of Market Cap)
Dividend yield : 8.33% (based on USD 1.2cents)

Being a company that operates based in hongkong and factories in China, one could almost classify this as an S-chip. However, this company was founded since 1991 and still largely owned by Japanese. Other than a one time fiasco few years back with a wayward Chinese employee trying to embezzle the company's cash stored at a china bank, which was discovered and monies recovered, management has been running the company well and has been quite generous with dividends. Personally I have communicated with the company and have received email replies from top management, so this gives me some confidence that they are an ok bunch and that the cash that they have is really sitting there in the banks.

Business wise, it is dependent on a big customer in Japan, which they have kept secret due to privacy concerns, but I am guessing it is SHARP which supplies displays to Sony and Nintendo (pretty obvious from the picture of a PS Vita and Gameboy on the products page). Sony does use screens for their products from different manufacturers and SHARP is one of them. The recent report by RHB about a new line of displays released in June vs those of rival JDI(Japan Display) also points to the  major customer being SHARP.

In the end, the fortunes of CDW are very tied to it's main customer for now. Management has indicated they will try to diversify their income stream to other customers. Lets hope they get a contract from JDI(Japan Display), which must be profiting from supply screens to the millions of Iphones and Galaxy S's out there.

Will be accumulating on any dips.

[author holds shares in this company]

UPDATE : Sharp is trying to sell its LCD business off likely to Japan Display. This either means loss of supply contract and business to Sharp or an influx of orders from JDI for new iPhones.

UPDATE April 2016 : SHARP has just been sold to Hon Hai Foxconn the famed Iphone manufacturer for Apple. With a new factory set up in Blangadesh and mention of a Taiwanese partnership (which could be Foxconn) that has developed new light guides, it looks like business at CDW might be ramping up soon.

PNE Industries Ltd - Cashing it in

PNE Industries Ltd (P07.SI) - Cashing it in

Company for this month is PNE Industries Ltd (current price $0.15). A bit of background : [ PNE Industries Ltd has three divisions namely Electronics Manufacturing Services (EMS), Emergency Lighting and Lithographic Supplies divisions. It is listed on the Main Board of Singapore Exchange since 2000.

PNE EMS not only designs innovative EMS products for its customers but also emphasizes on post-sales value-added services. This ensures customers receive the highest quality of services that are able to meet the needs of their organisations. In both Malaysia and China plants, products are manufactured according to international standard quality and regulatory requirements.

A leading brand name in Southeast Asia, PNE has penetrated the construction and building industry offering emergency lighting products. In Singapore and Malaysia, PNE is involved in the manufacturing and sales of lighting products. Its emergency lightings are certified and approved for used by the various independent certification test laboratories.]

For the past couple of years, PNE share price has not been doing much. It's share price spiked last year to 22cents after news of a possible buyer who offered 30cents for the owner's shares. We can speculate on why someone would propose an offer at such a premium but unless there are some undeclared hidden assets worth that much, the offer just didn't make much business sense. Unfortunately that got cancelled and the price dropped back to lows of 13-15cents. PNE Indus also pared down its stake in loss making subsidiary PNE PCB Bhd a listed company on the KLSE. PNE did not manage to completely sell off everything, so it now still has a much reduced stake. Recent quarters has seen PNE PCB's business turnaround into profit making, which will be good for PNE Indus.

Currently PNE Indus is going through the typical share consolidation which many small caps have done to be in line with new listing requirements of the SGX. Let's just use the old share price and numbers from the latest reports to see what value we can find...

Market cap : 50 million
NAV : $0.22
Price : $0.15 (32% discount to NAV)
Net cash :  30.1 million (59.79% of MCap)
Dividend yield : 3.33% (based on last final 0.05. Historically payout has been less but PNE Indus has been increasing its payout within its means past few years)

From what's been happening last year, it looks like the Tan family, who have operated the company for many decades and have a large interest in this company of around 80%, seem to be thinking of consolidating the assets in this company and wrapping things up. It is likely they are thinking of selling the company wholesale or going for privatisation.

In any case, the fundamentals look strong, business is still profitable and there is still a possibility of liquidation of residual stake in PNE PCB Bhd, possibility of another offer from 3rd party and of course, possibility of a general offer from the Tan family some time in the near future.

This stock is also trading very thinly at the moment which means interest is low and stock is unnoticed which bodes well for any catalyst which will bring it to the upside very quickly. Will be increasing my stake in the future on any significant dips.

[author holds shares in this company]

Asia Enterprises Holding Limited - Tough like a steel rod

Asia Enterprises Holding Limited (A55.SI) - Tough like a steel rod

Let me introduce AEH. Asia Enterprises Holding Limited is an old school steel supplier company in Singapore. (AEH Website) " With roots that date back to 1961, Asia Enterprises is a major distributor of steel products to industrial end-users in Singapore and Asia-Pacific. Over the past 39 years, the Group has continually expanded its product range and enhanced its value-added services to offer a 'one-stop' solution to its customers. Today, Asia Enterprises supplies over 1,200 steel products to more than 700 active customers involved primarily in marine and offshore, oil and gas, construction as well as the precision metal stamping, manufacturing and engineering/fabrication industries. The Group has forged a strong reputation as a reliable distributor of steel products to the marine and offshore industries."

Ok so what's so good about this stock? The sector which this company makes money from has become pretty bad, with oil prices tanking, shipping in the doldrums and Singapore property construction slowing down. In fact, the most recent financials show that AEH just made a loss this quarter! Yes a small loss of $0.017c, slightly more than their dividend payout for this year! Which means things look pretty scary for it at the moment. With problems brewing in China and Greece, things aren't looking too hot either going forward.

On the bright side, at the current price of $0.21, it is looking attractive. Let's have a quick look :

Net cash : 85.46% of Market Cap with NO DEBT (AEH has also been ramping down its business and reducing inventory/receivables in the past year, hence the large amount of cash it has.)

Discount to NAV : 31%

Div yield : 7.14% (yes AEH is pretty generous even in lean times, rewarding shareholders with a bigger div than last year, which was less than usual due to business being poor.)

As you can see, the balance sheet is rock solid and management consists of an experienced conservative bunch knowing how to hold down the fort during tough times. Currently trading volume is VERY VERY thin. Which is another plus. Though the dividend may be reduced or cancelled if the company continues losing money, pretty confident that should the markets for AEH's steel recover, AEH will definitely be ready to capitalize on it and start bringing the cash in.

[author holds shares in this company] 

Greece says "no" to austerity.

Most of us stock investors must be watching the recent Greek events closely.

As of this week, Greece has for the first time officially defaulted on IMF payments, not much, just 1.6billion Euros but that just goes to show how poor they really are! Can't even come up with that small amount.

Greece is currently run by a pretty unstable government which can be easily brought down by popular vote. They can't get anything done whilst pandering to the masses to get their votes. They have now hired a very young CEO with not much experience running the country.

Greece owes the world about €323 Billion Euros worth. That is quite a bit of moolah, considering greece only has a small population of 11million people.

GDP : On a downwards spiral, previously >300billion euros, down to 242billion+ in 2013 and very likely even lower now.

More detailed analysis here on Wikipedia.

So the question is can Greece pay back anything? The answer is most definitely a no, it doesn't take a genius economics professor to come to this conclusion. Without further slimlining of the budget, to ensure a surplus, there is no way to pay back the capital.

Already markets around the world are going down. There should be a bond rout in Europe pretty soon should Greek decide to default on all their debt and start printing drachmas.

So what can we do here in Singapore? Well the smart thing would be to sit back and see the story unfold in Europe and hope markets have a big correction and present a good buying opportunity.

Volatile July 2015

As July begins, we are faced with volatility in worldwide stock markets once again. It does seem like a perfect storm is brewing, if not already started, what with Greece defaulting, Chinese stocks crashing and the rest of the world trying to stay afloat amidst the commodity crash.

Will be blogging about some of my other favourite SGX stocks as soon as their valuations become attractive enough by my standards.

In the mean time, just sit back, collect dividends and wait for the market to retreat a bit more. After all, the STI is only down about 5% from recent high of 3500+ points, which was spurred by rumors of a SSE-SGX link, which seeing how the SSE is tanking will probably be many many more years in the making if ever.

PCI Limited - Full of cash

PCI Limited ( F1E.SI )
PCI Limited is your capable and reliable global electronics manufacturing service provider. Well at least that's what they say on their website. The company was founded in 1972 and is headquartered in Singapore. PCI Limited is a subsidiary of Chuan Hup Holdings Limited.

Stock is currently trading at 46.5¢ today.

Why invest in PCI now?
Business-wise, margins are getting very low, now at 2.5% mainly due to labour costs increases in china. Given the poor global economy, nothing exciting in this space is to be expected.

What is exciting is that the company has just sold its local leasehold property in Singapore and will be moving to a smaller and cheaper location nearby at 35 Pioneer Road North, Singapore 628475. For the new digs, they paid USD 2.243m and sold their old place for USD 13.614m. That's USD11.3m+ added to their bank.

Being debt free, PCI now has a big net cash position of USD59.13m (SGD79.7m), which is 86.09% of market cap today, which is almost 40¢ cash per share. So as we like to say, 6.5¢ for the rest of its assets and profitable business.

PCI has been generous with dividends, paying out 3cents usually. That's a good 6.45% yield.

To note, Chuan Hup Holdings being its parent shareholder with 77%+ interest and a failed mandatory cash offer to privatise in 2011 @ 50cents. Recently they have seconded one of their guys to be the Senior Vice President, Finance. With this new development, another offer coming is just a matter of time.

Expect this year to have another special bonus dividend given the huge cash balance and gains from their property sale. Though there is only a small margin-of-safety of 15% discount to NAV and likely limited upside for its EMS business, PCI is still pretty good for a long term hold until delisting.

[author holds shares in this company]

Avi-Tech Electronics

Avi-Tech Electronics ( CT1.SI )

Avi-Tech Electronics is a provider for Burn-in, engineering and manufacturing services in the semi-conductor & electronics industry. Share price now around 92 cents cum dividend.

Why invest in Avi-Tech Electronics?
Business wise, Avi-tech has improved from loss making due to failed expansion into USA away from it’s core competency. Good try by management but not good enough. Divesting from that business has brought the bottom-line back into the green and a big fat wad of cash. Check out the CIMB coverage in Jan this year which has some detailed info on this stock : click here.

Market cap today sits at 31.5 million. For that, you get 25.72 million in net cash (much of it, 19.42m locked up in a fixed deposits) That’s 81.65% of market cap worth of cash! For another 6 million you get the property and equipment worth >12million and the rest of the business for free.

With so much cash and the company operations now bringing in more, dividends have been resumed. Historically these have been pretty good up until the company started making losses on their USA venture. If payout of 3 cents is maintained at the end of the year, yield would be a good 6.52%.

What I like is that the CEO has done lotsa buy-ins below the 8cent level since Nov 2014 to Jan 2015 before the half-yearly results, which look pretty good now that they are out. Now we know why.

Management may have made a blunder in the US venture but at least they are not paying themselves excessively. Director renumeration stands at less than 600k for the 4 directors.

Given good outlook for a recovering semiconductor sector, even HDD makers like Cheung Woh are starting to make money, Avi-tech will likely remain on the mainboard for some time to come.

[author holds shares in this company]

12/08 - EPS FY3.63c 4Q 0.8c Div 1c. CASH & FD increased to 30.25m. Revenue up.
15/11 - 1Q2016 Results update : EPS 0.5c
26/08 - FY2015 Results update : 0.3c div + 0.7c special div. EPS 0.18c, FY EPS 1.1c.

Powermatic Data Systems Ltd

Powermatic Data Systems Ltd ( P12.SI )

Thought I might just use material from my forum posts to do an article on this stock. Please note at time of writing, share price is SGD$0.18.

Why invest in Powermatic Data Systems?
In the latest half-yearly report, other than net cash of ~16.5m, the other major non-current assets are 19.5m worth of property(yielding 3.9%) and 8.6m investment securities(yielding 5%+). The current distributorship side business is running at breakeven. There is no debt on balance sheet.
Market cap stands at 31m now, so buying P.D could be seen as paying for an investment portfolio of property and shares yielding about 4%+ with a side of free cash. Plenty of margin of safety.

Dividend yield (now 5.5%) has historical stability and though arguably not completely sustainable if we extrapolate the earnings from first half, there is still plenty of cash to distribute over next few years, until either distribution business picks up, or management redeploys the cash during a market downturn buying more securities for more dividend income. There is no need for a cut in dividend as the company has good yielding property and securities as mentioned above contributing to the bulk of the payout.

Most importantly, for such a small cap, is that property asset + the cash of 50% per share provides reassurance that come another financial crisis, it won’t face danger of going kaput, unlike other over-leveraged companies

In the end its just a matter of waiting, for OPMI who wanna invest, for either a rebound in business(pretty unlikely) or a realization of asset value by some sales or further investment using available cash pile.

P.D may not be in the property business as management claims but it definitely is looking more and more like an investment holding company now.

[ Note: Holding long term position ]

Memtech International Ltd

Memtech International Ltd (M26.SI)

Noticed this stock when it was trading at $0.10 levels. Now shot up to $0.123 high after 2Q report.
Balance sheet is rock solid with possible turnaround this year with 2 successful and profitable quarters, after improving their automotive side business in China. Yes China, but luckily this is a Singaporean company and not S-Chip.

More importantly, who owns this company then?
TOP 20 SHAREHOLDERS (Extracted from AR2013)
No. Name of Shareholder No. of Shares %**
1 Keytech Investment Pte Ltd 308,392,000 43.69
2 HSBC (Singapore) Nominees Pte Ltd 42,713,000 6.05
3 Chuang Tze Dey (Zhuang Zidi) 34,037,000 4.82
4 Chuang Wen Fu 27,714,000 3.93
5 Chuang Tze Mon (Zhuang Zimeng) 19,916,000 2.82
6 UOB Kay Hian Pte Ltd 16,805,000 2.38
7 Citibank Nominees Singapore Pte Ltd 13,877,000 1.97
8 OCBC Securities Private Ltd 13,756,700 1.95
9 DBS Nominees Pte Ltd 13,048,000 1.85
10 Wang Jian 10,165,000 1.44
11 Heng Ngee Boon 7,419,000 1.05
12 Ee Hock Leong Lawrence 7,295,000 1.03
13 Gu Chenghua 7,229,000 1.02
14 Chen Zhengmao 7,133,000 1.01
15 Koh Ser Kiong 5,000,000 0.71
16 Xu Jianxin 3,939,000 0.56
17 Quah Wee Hua 3,110,000 0.44
18 Rin Kei Mei 2,652,000 0.38
19 Cai WeiDong 2,650,000 0.38
20 Ong Poh Seng or Tan Swee Chin 2,640,000 0.37
TOTAL 549,490,700 77.87

After some digging, it seems Keytech Investment Pte Ltd is set up in Singapore and owned by 30+ people including the current Board of Directors with a good portion consisting the Chuang family. So management and ownership not too bad, most of BOD also having ~20+ years of experience in their respective fields with half from PRC and half from Singapore.

Memtech was listed on mainboard in July 2004 which makes it a decade old on SGX and has historically been an ok company which has been friendly to minorities in terms of dishing out dividends from earnings. Dividend yield was 6% when share price was stuck at 10cents past few months.

Fundamental snapshot @ $0.123 price :
NAV $0.22
Net cash 45.41%
Div Yield 4.88%
So far management OK, dividends OK, lots of cash OK, discount to NAV OK.
Dun care much for earnings but more concerned about business sector. For Memtech, looks like expansion into automotive segment was a smart move. China will be needing and producing lots of cars in the future even though short term wise, automotive sector there might be sluggish. So business sector outlook OK.
With five OK’s, let’s see how high or low this one runs :D

[ Update April : Profits taken and left some free shares ]