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]

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]

If only VICOM inspection came with this kind of carwash. 韩子萱

VICOM : Check out my Vezel

Since the STI has gone past 3500 and there's not much value to be found in small caps, I have been looking a bit at the big caps. Most big/mid caps can't be valued on NAV, but they can be valued on the usual revenue/growth/earnings and dividends.

VICOM (SGX:V01) 
Stock is currently trading at $6.11.

I was quite surprised to find a couple of bread and butter / defensive stocks still giving good yields and one of them was VICOM.

For a good overview of this company, follow the link below to this article from 2015. Most of the aspects of VICOM's business has been covered and I will not be wasting time talking about those.

Investing in VICOM: What You Need to Know About its Business Before You Invest

If you have read the above, you will now have a rough idea of what VICOM does and where its revenues come from.

Furthermore this stock has been written about by Fool.com.sg

Vicom Limited Is Trading Close To Its 52-Week Low Price: Is It A Good Business?

So why do I think VICOM is attractive as a dividend play?

Well check out this chart below

After a few years of highs from 2005-2008, the GFC came around and suddenly there was a decline in new car registrations from 2009 onwards all the way up till 2014. New car registrations really started picking up only in 2015. And whilst Cat A registrations seem to be tapering off at 50k in 2017, it seems CAT B new car registrations have hit highs again ~45k in 2017. This give us a grand total of >90k CATA/B and >100k new car registration in the past year.

As new cars start being inspected afer 3 years, the rising new car registations from 2015 onwards will hit the inspection requirement in 2018. As such, we can expect business to start improving for VICOM's inspection business. On top of that, contribution from their other segment is expected to remain stable as well.

To note, most of the gains in this stock would have been made post GFC as the stock went from $2 to peak at $6.70+ in Aug 2014. The stock has then slowly trended down, going as low as $5.70 in 2016 and has more or less stayed there for the past 2 years.

Of course it would have been better to pick up this share last year @$5.70 price range, but with a yield of around 5.89% at closing price of $6.11, it would make sense to accumulate this stock as part of a long term dividend portfolio. Revenue and profits are very likely to rise in the coming years and this stock should be very resilient should the economy slow down in the near future. And given that local investors are often pretty yield hungry, VICOM could be bought up till its yield becomes 4%, especially if revenue and profits increase in the coming years, as the high number of new Vezels, I mean cars, from 2015 to 2017 hit the inspection market.