Namlee Pressed Metal - The Carrier Man can

Namlee Pressed Metal (G0I.SI) - The Carrier Man can 

For this month, I have decided to do a post on Namlee Pressed Metal (current price 0.315).

NPM used to be located near a hot spring and the SAF yacht club in the Senoko industrial area, near those 3 pretty candlesticks which our friends across the causeway love looking at. It has since moved to the other side of the island, to Sungei Kadut industrial area near to King Wan's offices.

This has been a pretty boring and old family business. As usual it is run by a pretty old family and has been involved the metal products business in Singapore for god knows how many years. Well to be more exact, it is run by the Yong family, who had been  involved in the metal products fabrication business since the 1950s, incorporated in 1975 and listed on Singapore Stock Exchange (SGX) main board October 1999.



Revenue comes mainly from two places with about half from each on average.
1) The building products business supplying to the housing sector in Singapore and 
2) Aluminium frames for container refrigeration units

The main attraction for Namlee would probably be the aluminium frame business. It makes these frames for non other than leading world class Carrier group. Yep the one with "The carrier man can...) jingle we used to watch on TV trying to sell Carrier aircons. For starters, doing business with a global group like Carrier means so long as the relationship maintains its status quo, NPM has exposure to the worldwide container market with a company that has a sizeable moat. We can view this business as pretty constant and resilient, with okish margins.

Let's look at some current valuations in simple BlueFund fashion.
Market cap : 76 million
NAV : $0.498
Price : $0.315 (37% discount to NAV)
Net cash :  33 million (43.46% of Market Cap)
Dividend yield : 7.94% (based on 2.5cents, historically has been 1cent plus some bonus)

Namlee used to have a lot of cash last year (>60% Mcap) but quite a bit has been used for CAPEX, with a new factory set up in Malaysia, moving to its new lease-hold premises which it bought from JTC (this will save on rent cost) and ramping up of inventories as new orders come in. So it now has offices in SG but production factory in Malaysia, good combo.

Now that things are set up nicely, going forward, it is very likely that profits will continue to roll in and Namlee will become a nice and proper cash cow. Already this year's EPS is 5.35cents with a nice fat bonus div being paid out. With the Baltic Dry Index for shipping at multi-year lows, any rebound in the shipping scene will see a sharp rebound and pile up of orders and profits for NPM.

[author holds shares in this company] 

Oil prices are going Goin' Down For Real

Oil prices are going Goin' Down For Real (G.D.F.R)

Remember the trading frenzy and sudden big jump in oil prices in 2011 when Libya was having the "crisis" what with the arab spring coming and all that Gaddafi hoohah? The country plunged into civil war and their production tanked from 1.6+million bpd to nothing. Things have since improved somewhat since then and Libya is now pumping around half million bpd a day. That's not much, but at least it's contributing to the excess in global oil supply.

Let's cast our eye on the bigger fish. OPEC led by Saudi Arabia has been on a pumping spree and with increased production looks like it is on track to finally beat the crap out of America's shale players.

However, the biggest thing to consider on the supply side would be IRAN.

The Iranian angle : 
Exports of crude and condensates have been cut from 2.6 million bpd in 2011 to 1.4 million bpd in 2014, according to the U.S. Energy Information Administration. However Iran produced average of 3.6million bpd(barrels per day) last year (BP Statistical Review of World Energy 2015) and probably sold the excess via back channels to countries like Turkey and India which buy oil with gold. And back in 1974 before all the wars and sanctions they were doing 6million+bpd/day.

Just wait till the nuclear inspection thingie is done and Iran starts officially and properly exporting oil internationally again early next year and ramp up production. They are already inviting overseas majors to invest. They should easily hit around 4 million bpd if not more with plenty of untapped oil reserves and new investment coming in. Not to forget their natural gas reserves are humongous as well which will impact the LNG market prices and supply.

Iran's addition to the global oil supply glut will more than make up for any drop in Shale production from the Americans. "Barring any unforseen circumstances" , expect another race to the bottom for oil prices pretty soon.

[author is not vested in any stocks with any relation to O&G sector. Oh and also property sector.]

STI below 3000 points, it's been a while.

The STI going below 3000 points has not happened for a while now. It's been almost 4 years since it corrected at a similar time in 2011. Whew time does fly.

Still can't believe markets did not correct after the end of QE3 last year. Expected that the end of QE3 would herald the same market reaction as when QE2 ended. Well looks like history sometimes doesn't repeat itself. The only explanation would be that as QE3 ended, both Japan and European central banks started their own QE like programs. This could have maintained the global liquidity that was flowing into stock markets.

However this time round, it does seem like the imminent raising of interests rates by the USA FED is having an effect on markets. That together with economic data showing a slowdown in China, contraction in Japan and not much recovery in Europe, is probably causing a flight to safety, namely the USD and Gold.

So what's so great about STI going below 3000 points? 
For the value investor, as stocks fall, more and more value emerges. Especially when sharp drops happen in a short space of time and fundamentals of companies remain not too bad, if not unchanged. It also means previous stocks which may have risen to fair value and profits taken are now once again showing attractive valuations. On a larger picture basis, an investor who has taken profits when markets were high, now has a chance to deploy his cash back into the market. As it is almost impossible to time the bottom during a stock correction/crash, a simpler approach would be to just mechanically allocate capital into the market as it retreats.

At the rate things are going, STI seems like it will be doing a repeat of 2011. Currently it is off from peaks of 3500 by >10% already and might be down 20% pretty soon. It seems that most of the market action of blue chips selling off seems to be due to fund outflows by ETFs tracking the emerging markets. Looks like for now, the confidence in emerging markets has been lost and it might take a while before confidence is restored.