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 ]