New Toyo - Have they got their heads on?

Will the increasing use of medical marijuana benefit New Toyo?

New Toyo (N08.SI) - Have they got their heads on?

Past couple months have been pretty boring hence the lack of new posts. However now that earnings season is in, let's have a look New Toyo (current price $0.24)

[Established in 1975, New Toyo International Holdings Ltd ("New Toyo") is a leading regional provider of specialty packaging materials to the tobacco, food & beverage, wine, liquor and cosmetics industries in Asia Pacific.

The Group has two core business divisions. Its Specialty Papers division focuses on the production of laminated foil paper, and coated paper and metalised paper, while the Printed Carton and Labels division offers mainly gravure and lithography or offset printing of packaging materials for cigarettes and fast-moving products. In addition, the Group has a trading business that focuses on tobacco packaging-related materials, as well as a corrugated cartons production operation.]

Business wise, in the past half year, nothing exciting has been happening to this stock. New Toyo still derives most of its income from Tien Wah (a printing company based in Malaysia) via tobacco carton printing contract with British American Tobacco.  Both revenue and earnings have had a dip and been trending down YearOnYear around 10% and share price has also accordingly been on a downtrend. Looking at the latest quarter, revenue seems to have started increasing again with earnings back to 1c+ a quarter.  This is likely due to closing down of operations in Australia and ramping up of production in Vietnam. This is now complete and we are very likely to see nice profitable quarters going ahead.

With annual EPS now at 3.34cents and quarterly EPS 1.03cent, it would be reasonable to expect at least 4c in the coming year. Wouldn't describe management as as prudent bunch or good with their investments, as history has shown with a "toilet paper" fiasco, which is now done and dusted, so we won't go into that. What is good now is that management is still consistent with their dividend payouts and has increased the half yearly 0.6c div to 1c. At current earnings rate this is both sustainable and generous with a total 1.6c for our investing troubles this year. That's a respectable 6.67% div yield soon to be paid out in May, and should interim be increased to 1c as well, we could be looking at 8.33% yield in half a years time.

Let's look at some current valuations in simple BlueFund fashion.
Market cap : 105 million
NAV : $0.386
Price : $0.24 (38% discount to NAV)
Net cash :  51.2 million (48.78% of Market Cap)
Dividend yield : 6.67% (based on 1.6cents, historically >1cent a year.)

NAV is $0.386 which provides a Margin of Safety of 38%.
Though debt is still 27.5 million, this is 5.1million less compared to last year and will likely be paid down more in the coming year. The cash balance of 79million will easily cover that and result in net cash of almost 12cents a share.

In the coming years, things are definitely looking good for New Toyo. This stock will likely be a profitable cash generator and we may even have surprises if NT decides to do something with the valuable Australian industrial land near to Sydney Airport and some lands in Malaysia as well. With the recent announcement of rights issue for Tien Wah, it does sound like something is in the books.

[author holds shares in this company]  

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.]