Monday, November 18, 2019

Captii (AWV.SI) - 3Q Results 2019 Update

Captii (AWV.SI) - 3Q Results 2019 Update

It's been a couple of boring years with this stock. Since my last write up here the stock has been slowly going down in price, though only very gradually and on very very small volume. This is consistent with its poorer results these past couple years and cut in dividend.

In any case, at a price of sub 40c, the valuation on this micro-cap is still looking quite good.

Let's have a closer look at the financials in simple Blue Fund style :

Market cap : ~12 million
NAV : $1.36 (up from 1.01 couple years back)
Price : $0.38(72% discount to NAV)
Net cash :  6m (previously 13.45 million)
Dividend yield : ~3.3% (based on 1.25cents, down from 2cent year before)
Earnings : already 8c+ (likely to hit 10c+ for FY results)

From the current numbers, even with the drop in share price, Captii does not really seem anymore attractive than before.  Since 2016 Captii has put on some debt, all of it short term at 1.5m. This has cut into the net cash pile which is now only 6m, half of what it was before. Having said that its still half of market cap, quite a significant chunk. The drop in dividend by half also means the yield is nothing to be excited about at 3.3%.

Positives is the NAV has risen to 1.36m, though a big portion, about a third is in intangibles and other financial assets. Captii's business also looks to be rather resilient in face of slowing global economy and trade tensions and most importantly still very profitable with high margins. It will be important to monitor losses from its venture investments though as these can result in bad results for the company despite a solid core business.

Will probably watch and wait a bit more to see what happens with the dividend payout in Q2 next year. Definitely worth accumulating more if management restores the 2.5c payout again. Captii is easily able to afford to pay that with the earnings of 8c+ its already made so far.

[author holds shares in this company]

Tuesday, November 12, 2019

Powermatic Data Systems Ltd (BCY.SI) - Surfing the 5G wave.

Powermatic Data Systems Ltd (BCY.SI) - Surfing the 5G wave!

Hi guys, in typical tradition, I am back with another review on this stock which I last blogged about 2 years ago! Check it out here. and the previous review which was another 2 years before!! Lol...

Ok so back then Powermatic was trading around 90c (hope you got some :) As usual I wasn't expecting it to do much other than maintain the status quo. However by some stroke of luck, the company has managed to grow its business very fast and it seems for the next few years it will be full steam ahead!

So Powermatic just released it half yearly and results look really encouraging. Share price has adjusted accordingly to around $2.50 at the moment.

A quick look at the latest results shows an increase in revenue to 14.259million, a 64% jump compared to same period last year which was 8.7m. Looking at the last full year results we can calculate the last half years revenue has been 12.254m. This growth is pretty encouraging for such a small niche company like Powermatic.

Earnings for this half year now stands at 16.87c, doubled from the year before. Looks impressive but not surprising considering the high margin nature of the business. And the more hardware they produce, the higher the utilization rate will be which will drive down unit cost. This is often seen in manufacturing companies. The opposite often happens whereby losses can be compounded when production goes down.

Let's see how the valuation stacks up now.
Market cap : ~90 million
NAV : $1.76 (RNAV likely >$2++)
Price : $2.53
Net cash :  34.3 million
Property : 17million (not been revalued, worth at least 30million++ today.)
Dividend yield : 2.77% (5c+2c bonus div or double that this year is not a problem)
EPS : 1H 16.87c, 2H likely 20c with new factory in Malaysia starting production this month)

As a value hunter, I would say Powermatic is near fairly valued now. However, business wise it does seem that it has become a growth company, especially with the global uptake and investment into 5G in the next few years. Powermatic Data has run its course as a value company and now transformed into a growth company.

With full year EPS likely to be at least 35c considering the current growth. Just based on a PE multiple of 12, it will very likely hit a share price of $4.20 or more depending on what results comes out next year. As usual just waiting for a couple of trading houses to publish some glowing reports.

I don't usually gives the thumbs up for a stock but barring a big financial crisis from trade wars, it seems Powermatic Data System is poised for profitable growth and ticks all the right boxes as an investment. Would you be buying in as much as u can at prices today?

[author holds shares in this company]