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]