Captii (AWV.SI) - 3Q Results 2016 Update

Captii (AWV.SI) - 3Q Results 2016 Update

As the year end earnings season comes around, I will be updating results from companies I am keeping track of with a quick and short summary. Let's start off this season with Captii (AWV.SI)

To be fair, it has been a challenging year for Captii. But this is to be expected given that the global economy has not been doing that well and Singapore has been hit quite badly by the collapse of the OnG and Shipping industries.

The good news is Captii still remains pretty profitable, making 1.25c of EPS this quarter and 5.05c for 9m of this year. This means the dividend payout next quarter of 2.5c is more than safely in the bag, providing a dividend yield of 5.38% @ $0.465 price today. Though net cash has decreased due to capex this quarter, it still remains at a high 75% of market cap and Captii remains debt free.

Of note is that trade receivables has increased to over 9m from 6m last quarter. Whilst it is a recent high, this was also observed in 2014 and it is likely Captii will get a lumpy payment in the next quarter or so.

Azeus Holdings (BBW.SI) - Profit Warning

Azeus Holdings has been on my radar for a while. Decided to do a short post on this under the radar stock.

[ PROFIT GUIDANCE released 10 Oct 2016 :
Following a preliminary review of its unaudited financial results, the Board of Directors (the “Board”) of Azeus Systems Holdings Ltd. (the “Company”, together with its subsidiaries, the “Group”) wishes to advise its shareholders that the Group is expected to report a net loss for the financial period ended 30 September 2016 (“1H FY2017”) and financial year ended 31 March 2017 (“FY2017”).

The loss is mainly attributable to:
- Higher expenditure relating to the Group’s continued commitment in building up our capacity, as well as aggressive and material investments made in the Group’s Products business to boost its growth.

- Lower revenues mainly due to fewer IT services projects secured in the current and previous financial years, in light of the lower number of IT services tenders available for bidding compared to previous years.

Further details of the Group’s financial performance will be disclosed when the Company announces its unaudited consolidated financial results for the Group for 1H FY2017 on or before 14 November 2016.

Shareholders and investors are advised to exercise caution when dealing in the shares of the Company. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor, accountant or other professional advisers.]

At the moment this IT stock is trading at almost net cash (11.3m+ vs a Mcap of 12m) and with no debt it is a pretty safe investment. Question is at what price will it be cheap, considering gov in Hongkong is changing as China tries to muscle in and there is much uncertainty with policies as well as gov spending on IT going forward...

[author is not vested in this company]

Multi-Chem Limited - Helping Asean stop a bunch of hackers.

Multi-Chem (AWZ.SI) - Helping Asean stop a bunch of hackers

As the market has been more or less trading sideways, there has not been much action on my blog. However this stock has been brought to my attention recently due to their rising amount of net cash. Let's have a look at Multi-Chem, current price $0.52

[Established in 1985 as a small distributor of PCB chemicals and materials, Multi-Chem is now a leading drilling service specialist and a major distributor of specialty chemicals and materials to PCB manufacturer in the region.

In May 2002, we diversified into the business of IT distribution where we focus on best-of-breed internet security, WAN optimisation, network management and video conferencing products from industry leading vendors. Through Multi-Chem’s subsidiaries under the M.Tech umbrella, our IT business has expanded in both product range and geographical coverage since inception and now spans Singapore, Australia, China (including Hong Kong), India, Indonesia, Japan, Korea, Malaysia, Myanmar, New Zealand, Philippines, Taiwan, Thailand, United Kindom and Vietnam. We started IT training business in Singapore in late second quarter of 2004 to complement the IT distribution business. We are currently authorised to conduct training for Allot, Blue Coat, Check Point, Solarwinds, MobileIron and Nutanix courses.

Business wise, it seems the company is still running its original PCB related business. However that is now only contributing less than 10% of its total revenue in recent years. In AR2015, revenue from PCB segment was 25.621m vs. IT segment of 321.436m. Given this we can see that Multichem has evolved into an IT company, more specifically one that is in the IT security distribution business. How solid is the distribution business? I don't know. How secure is this business? I don't know either. But it does seem that the different software companies are happy to work with MultiChem in distributing their products and follow-up with end users with training and maintenance. This bodes well going forward as IT security will continue to be in demand as Singapore and other nations in ASEAN move towards more technology based economies.

Ok enough about the business, now the valuation, BlueFund Style:
Market cap : 46.85 million
NAV : $0.9827
Price : $0.52 (47% discount to NAV)
Debt : 25.407million
Net cash :  44.574 million (41.34% of MCap)
Dividend yield : 6.37% (based on 0.331 past 2 years, increased from 0.11 before. FY15 EPS was 5.3c)
Daily Volume : What volume?

Valuation looks pretty good at current price which has recently bumped up due to cum dividend. Their historical div payout has been stable and reasonable as well.

Management looks like a nice bunch. Of note, the Executive director is an engineering grad from NUS who is spearheading their expansion into IT security sector in Asia and this has been their main growth engine as PCB related business has stalled. Boss has also done a buy-in at 52cents recently. Shareholdings wise boss, his wife collectively own ~68%, add in a Thai investor who owns ~12% and we have the top 3 shareholders owning close to ~80% of the company. Hence not much free float or daily volume. Trading at such a steep discount to NAV, the likelihood of a privatisation or sale of the company is very much increased.

[author holds shares in this company]