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.