PNE Industries (BDA.SI) - Finally hit NAV again.

PNE Industries (BDA.SI) - Finally hit NAV again

Hi everyone. A short update.

With the current run-up in our stock market, STI is now around 3150, back to 10% below previous recent highs of 3500, many small cap stocks have had a spectacular run up.

Since its full year results release, PNE Industries has not disappointed either. The share price has finally hit 96c. This is slightly below its NAV of 96.3c but considering the recent big dividend payout, its close enough.

As such I have started to pare down my holdings in this counter, recoup my capital and lock in gains whilst leaving some free shares. This will replenish my cash holdings and will add to my free shares holdings :D

Thank you Trump rally.

PNE Industries (BDA.SI) - Full Year 2016 Results Update

PNE Industries (BDA.SI) - Full Year 2016 Results Update

Wow the year is almost over. PNE Industries finally released their full year results for 2016. Most of it has come in as expected. The stock has run up from 60c lows to hot above 80c these past few months.

Revenue has remained somewhat flat YoY at 74m. There was a sizeable contribution of 6.7m from the sale of PNE Print which has boosted profits. Excluding this gain, profit for the year would be $9.5m. That's pretty good. It also seems PNE has and will continue to benefit from the depreciation of the ringgit and appreciation of US dollar. Given that Ringgit has recently fallen even more recently and will likely continue to fall as funds move out of emerging markets, we should expect PNE to benefit from forex gains and lower costs of production from PNE's Malaysian factories.

Dividend of 3 cents was announced, including the 5c interim paid out already, 8c from a total of 19.3c EPS comes to about a 40% payout ratio. This is pretty ok for OPMI but somehow doesn't feel as generous as before. Perhaps management is planning to utilize the spare cash for something else.

One thing that sticks out is that PNE has initially announced that USD 7.366m(~SGD 9.94m using a rate of 1.35 as when this report was made) was received as payment for PNE Print with another 1m RMB(~SGD 200k) withheld by Chinese tax authorities. If that is the case, both figures of SGD6.7m as the "gain on disposal" and SGD8.748m as "proceeds from disposal of subsidiary",  do not match up with the SGD 9.94m that was supposed to come into the bank as announced on 18 April 2016. Even taking a lousy rate of 1.2x USD/SGD, at least 9.2m proceeds should have appeared on the books.  This shortfall of a million SGD is either a mistake from the accounting department or some other reason.

In any case, NAV is now 96c and the balance sheet is looking fantastic with no debt and net cash of 60% of market cap, so hopefully there will be some volume to sell into over the next few days and for the stock price to hit NAV.

PNE Industries Ltd - PNE Print Disposal Done!

PNE Industries Ltd (BDA.SI) - PNE Print Disposal Done!

It's been a while since I looked at this stock (previous post here). Ever since it peaked on news of a possible takeover by a mysterious indonesian buyer and sale of PNE PCB subsidiary in Malaysia, the former which did not happen and the latter only selling two thirds, nothing much has been happening. Well there was the 4 to 1 consolidation that happened last year, but that's so common on SGX that its like a WHATEVER for the seasoned investor.

So what's so exciting that warrants a post? For starter's the sale of a loss making subsidiary PNE Print in China has just been completed and the cash, the moolah, the kaching has arrived in PNE Industries bank account (the normal one, not the Panama one, *joking*)

Before thinking of the words special bonus dividend, let's have a look at how the valuation looks like now, BlueFund style:

Market cap : 56 million
NAV : $0.85
Price : $0.665 (21% discount to NAV)
Net cash :  37.56 million (67.24% of MCap)
[FEB div subtracted and PNE Print sale added. ]
Dividend yield : 6.02% (based on interim $0.02 and final $0.02. FY15 EPS was 11.4c)
Daily Volume : What volume?
Debt : What debt?

The discount to NAV is now 21% (not including realised 7.6c from this disposal).  On the other hand, everything else seems to be looking up. Company remains debt free with a nice and bigger stash of cash after this disposal. Earnings look pretty good. Dividend yield whilst not awesome, is pretty reasonable and the recent sale guarantees a nice payout from management, as they did payout very quickly previously with the PNE PCB sale.

In these turbulent and difficult times, with the bad global economy that is now even threatening to cause a recession locally, it would seem PNE Industries has held up pretty well and management has been making all the right moves. Unfortunately even during the market dips earlier this year, PNE's volume and price have not moved much, hence accumulation had to be from the sell queue. PNE Industries half yearly results will be out soon this month and will likely show some good earnings and whilst this sale completed in end April might not be reflected in the books yet, hopefully management will be kind enough to announce a special dividend with the interim dividend.

[author holds shares in this company]

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]