The Blue Fund

Captii (AWV.SI) - 3Q Results 2019 Update

2019-11-18T19:46:00.000-08:00

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.

2019-11-12T01:50:00.001-08:00

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]

VICOM : Check out my Vezel

2018-03-16T02:23:00.001-07:00

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.

Happy Chinese New Year 2018

2018-03-08T06:37:00.002-08:00

Yep another year has passed and it's been 9 months + since I last posted here! hopefully you people have this site on your feeds and updates should show up.

First off, wishing all of you a happy CNY 2018!

Indeed 2017 has been a very profitable year and it seems 2018 will too.

I have been pretty lax with the company updates but the market has been roaring, gosh our STI has hit recent highs of more than 3500+ which is around the same as the highs of 3800+ reached at the peak of 2007 before it went down and we had the GFC. This seems to have lifted all boats, hence really nothing much to write about since it has become really hard to find value stocks that have potential.

In any case, I will be back to updating my thoughts on companies I am looking at and hopefully the market will have a correction or crash so that it will be so much easier to find value.

Powermatic Data Systems Ltd (BCY.SI) - Full Year 2017 Financials.

2017-05-27T22:56:00.001-07:00

Powermatic Data Systems Ltd (BCY.SI) - Full Year 2017 Financials.

Hi to the select few readers of my blog. It's been a while since my last blog on this stock 2 years ago when I first started The Blue Fund blog.

Back then the share price was 18c. Powermatic has since gone through a share consolidation of 5 to 1. So a price of 90c post-consolidation. Though it would be nice to put out a short post on how things are going with this company.

It seems the company has not done much in past 2 years. It has managed to improve its property and rents are going ok now and has had some cost savings moving into this property. As the commercial property market hasn't crashed, the value of it's main property asset is still doing ok.

It's other arm of business producing Wireless and network products is not growing át all but at least is going at a steady pace. Revenue has been flat despite improved global conditions in the past half year.

What's surprising is in the last half year, there have been some realisation of profits from available for sale assets of $3 million, which has not only boosted earnings but also net asset values (NAV). As I had alluded before, this company is going towards more and more of a holding investment company, rather than a technology manufacturing one.

Going forward, it seems boss Dr. Chen Mun will be going back to doing more R&D and leaving the main running of the company to the younger Katherine Ang, which looks like a good thing.

It will also be interesting to see if the company is really working with Google and Uber on some secret project, perhaps some sort of wireless self driving technology which is the buzz with electric vehicles and drones becoming mainstream. Management had alluded to this in last year's AGM.

Of note, the company now has a pile of liquid assets of 25.95million and no debt vs. a market cap of 42million (61.59% of Mcap). Whilst NAV has gone up to $1.51, RNAV is probably in the vicinity of $1.90 now. Earnings are 8.1c per share at the moment, however they would probably moderate to 5 or 6cents should global business conditions deteriorate in the near term. Co. has a pile of excess cash on hand, perhaps we will see this cash pile reinvested into the above-mentioned projects which management had mentioned last year, it seems like management is not going to return much of that to shareholders in the short term.

For this year at least, management has been pretty generous and has announced a record dividend payout of 7c, an additional 2c to the usual yearly 5c payout. With the recent fervor in tech manufacturing stocks still going strong on the SGX and Tech stocks in general, it seems this big fat dividend payout may be a short term catalyst in pushing up the share price in the near future.There is also a slim possibility that the company could be sold off or privatised as Top 20 shareholders own almost 80% of all the shares.

Now all we need is an analyst from CIMB or someone from The Edge or NextInsight to do an article, fingers crossed!!

[author holds shares in this company]

STI 3150 - Time to take profits.

2017-04-27T08:15:00.000-07:00

STI 3150 - Time to take profits.

Its almost the end of the month and guess it's due for another blog post. Unfortunately with the STI trading at above 3150 points which is just 10% from its last peak, not much value has presented itself.

A lot of stocks have performed very well in this period, as have many that I have discussed.

This is a common occurence when markets are good. Most stocks will go up, as positive sentiment sets in and often earnings will be improving as well.

However, we should not forget that markets can turn, and sometimes very quickly and very sharply. There is nothing we can do to predict this event. But history tells us that this can and will happen at some point in time.

STI has risen by 10% from 2800 level. With this in mind, it is probably time to take some money off the table. Thankfully with recent big rises in stocks, have been able to pare down some positions and build up the cash position further.

Remember,
When every one is happily buying and buying, its time to be selling and selling. Once the party is over and every one is selling and selling, that's the time to be buying and buying. That's when you will need your cash position.

Goodnight and feel free to drop a comment. Hope to see you guys at STI 2800 again!

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

2017-03-25T00:49:00.003-07:00

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.

Multi-Chem Limited (AWZ.SI) - Full Year 2016 Results Update

2017-02-13T17:58:00.000-08:00

Multi-Chem Limited (AWZ.SI) - Full Year 2016 Results Update

As expected a stellar financial year for Multi-Chem. Business is chugging along nicely. Revenue has been flat but profits remain robust. EPS this last quarter being boosted by forex gains of ~1m from USD going up and 1.4m or reversal of doubtful debt allowances.EPS for FY16 was 10.8c. A big dividend of 3.3c has also been announced. This brings payout ratio to 40% which is nothing to shout about but fair.

Of note,
1) debts have been halved pretty quickly from 22m+ down to 11.5m now. The company will be able to go debt free at anytime.
2) A recent sale of factory land in China for 8.3m should bring cash to 58m+ and net cash to market cap to 65%. Though this sale was only slightly profitable and NAV will not be getting a boost, it is good to see Mgt. might be looking to slowly exit this business, which is not contributing much at this point, and focus more on the new core business.
3) The recent insider buy in @ 52c after 3Q results last year shows that mgt. already knows good results were on the way.

The share price has reacted accordingly after this results release. Since covering this stock at 52c, price has moved up to 78c at close yesterday. Though on not much volume. Given that top insider ownership is pretty high, this is to be expected. IMHO it is very possible a privatisation could be on the way.

[author holds shares in this company]

Memtech International (BOL.SI) - Making some Beats

2017-01-19T17:49:00.001-08:00

Memtech International (BOL.SI) - Making some Beats

It's been almost 2 years since I started this blog with a first post on this stock. Much has happened since then. Memtech did well back then, stock price rose from 10c to over 15c(75c+ post consolidation) and then met with some hiccups and made some losses. Memtech has since done a 5:1 consolidation and share price has gone back down to the current 62cents (it did go down to around 55cents when announcing loss making quarter last year). Currently, there seems to be a loss of interest in the stock from investors.

Memtech is now supplying plastic automotive components to world number 6 automotive parts company Faurecia (which makes car interior components). Faurecia makes interior parts for many major automotive companies, including Tesla. Memtech has been supplying Faurecia for the past year for Tesla model X and S. This year with ramp up of upcoming mass market electric car Tesla Model 3, it looks like there will be a flood of orders coming in for Memtech. Whilst Memtech is only making parts for the climate control system a.k.a aircon (those knobs and stuff you press) there will be avenue for memtech to branch into other parts as Faurecia provides solutions for all the interior parts and Memtech has expertise in Rubber/Plastics.

The other big boost Memtech could get is from its production of parts for major headset brand Beats by Dr. Dre. Apple bought this brand couple years back and Memtech has been making parts for their headphones. However there were some issues with Apple's cost cutting with a contract renegotiation that resulted in the poor results last year. Another popular brand for streaming movies with a TV plug-in stick called Roku has Memtech supplying it as well.

Memtech's most recent 3Q16 results are looking up though with EPS of 2.2 this quarter. Let's have a look at how the valuation stacks up BlueFund Style :

Market cap : SGD 87.346 million
NAV : $1.10
Price : $0.62 (45% discount to NAV)
Debt : 3.04 million (3.48% of MCap)
Net cash : 41.92 million (44.52% of MCap, this includes the $8m coming in from recent factory land sales.)
Dividend yield : 4.84% (based on about 3c past few years. Dividend policy of at least 30% payout)
Daily Volume : What volume? (my favourite type of volume :D)

Usually I try not to dwelve too much into the companies business. The sector the company operates in is more important most times. For memtech, automotive sector in China looks weak this year after sales tax on small cars were reduced last year to spur demand but have been put up again. However consumer electronics sector looks to be stable if not strong so memtech should be able to stay profitable this year.

Management is also trying its best to bring the company into the new-age. The transition of boss to his son should go smoothly as well. In view of this, it looks like an opportune time to start accumulating this now unloved stock. I do hope management looks to cheaper asian countries like Vietnam to move and diversify some of their production.

[author has shares in Memtech International.]

Happy New Year 2017

2017-01-04T15:37:00.003-08:00

Happy New Year to everyone and welcome to my humble blog.

2016 brought us the Brexit and Trump :D

2017 looks like it's shaping up to be a very very interesting year. Markets are all bubbly and happy but will this last? Well we'll see, in the mean time, keep vested, enjoy your dividends and polish your elephant guns!

CDW Holdings (BXE.SI) : Another big round of share buy backs.

2016-12-04T20:18:00.002-08:00

CDW Holdings (BXE.SI) : Another big round of share buy backs.

Massive share buy back exercise ongoing after Q3 results. so far hit 1.33m+ shares liao. Ongoing in a big way today as well. It is still trading around 97% net cash value @ 0.255 price, though price has gone up roughly 10% from 22c levels a couple weeks ago.

I vaguely remembered that they did do some big buybacks in 2012. So went back and had another look. Indeed they purchased 19,229,000 out of the authorized 47,748,000 shares from Oct 2012 right till the beginning of Jan 2013. This was later given out mostly as employee stock options to management. Some getting as much as 2m+ shares. The share price was pushed up 50% during this exercise. Treasury shares got boosted to 44,632,000

This time round, the authorized number is 23,745,700(which is about the same as last time, factoring the 2:1 share consolidation. So far as of closing last friday, company has bought back 1,332,300 only. Treasury shares stand at 15,552,302. It is very likely CDW will buy back another 7-8million shares to top up the treasury.

I was waiting for the usual insider buys to go with the share buybacks but looking at 2012's buybacks exercise, it seems management will not be doing any buying, unlike what Avi-tech's boss did.

In 2012, CDW recorded a jump in revenue and profits in their 4Q report right after their massive buy back exercise. In this 3rd quarterly report management has hinted they were in testing phase for volume production of their new product with a new client. They have also cleared out a factory in China for future OEM production. It seems with this buy back exercise, this testing may have been successful and company could be announcing a big deal in next year's 4Q, commencing mass production at the cleared up factory. Of course this is speculation at this point.

In any case, being at net cash value, I have finally decided to start accumulating despite a slightly improving market from oil price recovery, as I feel should 4Q result be bad, downside is limited whilst upside could be substantial if history repeats.

[author has shares in CDW Holdings.]

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

2016-11-28T06:24:00.001-08:00

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.

Recession is coming to town.

2016-11-20T21:15:00.002-08:00

Recession is coming to town.

It sure looks like a recession is coming to our shores.

First our GDP has disappointed.
Singapore Q3 GDP grows 0.6% year-on-year, below expectations

And yesterday exports continue to contract in a big fashion Month on month and year on year.
Singapore October exports contract 12% in worse than expected slump

It's no joke, when recession hits, many people will suffer pretty badly financially. If the recent crash and defaults in Oil n Gas companies in Singapore have shown us anything, it is that many investors invest in companies they don't understand or in financial products they know next to nothing about.

Whilst most people are getting concerned, value investors will be rejoicing. There are many things to buy during a recession, but most importantly there has to be cash in the bank. Get ready, shopping season will be starting soon.

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

2016-11-13T21:59:00.002-08:00

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

2016-11-10T18:34:00.002-08:00

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.

2016-10-16T06:36:00.002-07:00

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]

PNE Industries Ltd - PNE Print Disposal Done!

2016-05-10T05:58:00.000-07:00

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]

Captii - Capturing the alluring value

2016-04-21T07:12:00.001-07:00

Captii (AWV.SI)- Capturing the alluring value

Captii is a tiny little micro cap which has been listed since 2004 post tech crash and at the beginning of the now quickly maturing mobile phone era. Current share price is $0.46

The usual background story from SGX
[Captii Limited, an investment holding company, operates in the technology and telecommunications businesses in south east Asia, south Asia, the Middle East, Africa, and internationally. It operates through VAS, TECH, OSS, and OHQ segments. The company offers telecommunications, technology, and customized solutions for telecommunications operators, service providers, and enterprises; and research and development, software engineering, system integration, project management, and maintenance and support services for the telecommunications industry. The company also offers global roaming quality and service management solutions; and mobile messaging and signaling, value-added-services, and mobile network operation support systems, solutions, and managed services. In addition, it distributes third party telecommunications products and components, as well as engages in the property investment activities. The company was formerly known as Unified Communications Holdings Limited and changed its name to Captii Limited in May 2014. Captii Limited was founded in 1998 and is based in Singapore. Captii Limited operates as a subsidiary of Worldwide Matrix Sdn Bhd.]

Long story short, Captii makes money from major local telcos in Singapore such as Singtel/Starhub/M1 and Maxis/Digi in Malaysia and is owned by a Chinese Malaysian boss.

Chanced upon it before the recent 10 to 1 consolidation which would translate to a stock price of $0.585 today. At that time, I had only put it on my radar as the dividend yield was low even though other value indicators were pretty good. Since then, the stock has slid to $0.46 and the yearly dividend has been increased to 2.5c.

Let's look at some current valuations in simple BlueFund fashion.
Market cap : 15 million
NAV : $1.01
Price : $0.46 (54% discount to NAV)
Net cash : 13.45 million (91.49% of Market Cap)
Dividend yield : 5.43% (based on 2.5cents, up from 2cent year before)

Historically, they have been consistently turning in profit for quite a few years now. The major shareholder and founder of the company is also still at the helm and doesn't pay himself ridiculously, so that's pretty good for OPMI friendliness and with the increased div now, company is starting to pay out more of their profits. Guess they have no choice, cash is piling up faster than they can distribute. Boss also owns 76.89% of the company which means a possible privatisation could be in the books. Captii could be another takeover target from an overseas tech company as well.

To note, the stock has been trading sideways the past 8 years and in fact has not traded upwards much since its big fall in 2004 from $6 after IPO to below $1 a year later and even as low as 15cents during GFC 2009, so it could be a value trap. But it is now trading at almost cash value and with likely further increases in dividends and yield, this could very well be a BUY in my books pretty soon, once yield goes up a bit more. That is if anyone wants to sell.

[author holds shares in this company]

New Toyo - Have they got their heads on?

2016-03-07T18:37:00.001-08:00

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

2015-12-05T04:33:00.002-08:00

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

2015-09-14T06:49:00.001-07:00

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.

2015-08-23T07:24:00.001-07:00

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.

CDW Holdings - Brightening your Sharp screens

2015-08-15T19:30:00.001-07:00

CDW Holdings (D38.SI) - Brightening your Sharp screens

For this month, I have decided to do a post on CDW Holding Limited (current price 0.192). [CDW is a Hong Kong-based investment holding company. The Company focuses on the production and supply of niche precision components for mobile communication equipment, gamebox entertainment equipment, consumer and information technology equipment, office equipment and electrical appliances. The Company operates in three segments: LCD backlight units, Office automation, and LCD parts and accessories. LCD backlight units segment is engaged in the manufacture of liquid crystal display (LCD) backlight units for LCD modules. Its Office automation segment is engaged in manufacture and trading of parts and precision accessories for office equipment and electrical appliances. Its LCD parts and accessories segment is involved in manufacture and trading of parts and precision accessories for LCD modules.

This Japanese controlled company (>50% owned by MIKUNI CO., LIMITED), operating out of Hongkong but listed on SGX has been around for quite a while. It has also been rewarding OPMI with steady dividends for quite a while. Recent half-yearly results shows that they will be doing their USD0.5c interim div payout. Earnings have also been good so far at USD1.22c for this quarter and USD1.55c for first half. It seems the investment they made previously for a new factory production line for backlight units has been profitable, though revenue has declined a bit compared to same quarter last year. Once again let's have a quick look at it's overall current valuation, in simple BlueFund fashion.

Market cap : 93 million
NAV : $0.205
Price : $0.192 (7% discount to NAV)
Net cash : 85.57 million (72.04% of Market Cap)
Dividend yield : 8.33% (based on USD 1.2cents)

Being a company that operates based in hongkong and factories in China, one could almost classify this as an S-chip. However, this company was founded since 1991 and still largely owned by Japanese. Other than a one time fiasco few years back with a wayward Chinese employee trying to embezzle the company's cash stored at a china bank, which was discovered and monies recovered, management has been running the company well and has been quite generous with dividends. Personally I have communicated with the company and have received email replies from top management, so this gives me some confidence that they are an ok bunch and that the cash that they have is really sitting there in the banks.

Business wise, it is dependent on a big customer in Japan, which they have kept secret due to privacy concerns, but I am guessing it is SHARP which supplies displays to Sony and Nintendo (pretty obvious from the picture of a PS Vita and Gameboy on the products page). Sony does use screens for their products from different manufacturers and SHARP is one of them. The recent report by RHB about a new line of displays released in June vs those of rival JDI(Japan Display) also points to the major customer being SHARP.

In the end, the fortunes of CDW are very tied to it's main customer for now. Management has indicated they will try to diversify their income stream to other customers. Lets hope they get a contract from JDI(Japan Display), which must be profiting from supply screens to the millions of Iphones and Galaxy S's out there.

Will be accumulating on any dips.

[author holds shares in this company]

UPDATE : Sharp is trying to sell its LCD business off likely to Japan Display. This either means loss of supply contract and business to Sharp or an influx of orders from JDI for new iPhones.

UPDATE April 2016 : SHARP has just been sold to Hon Hai Foxconn the famed Iphone manufacturer for Apple. With a new factory set up in Blangadesh and mention of a Taiwanese partnership (which could be Foxconn) that has developed new light guides, it looks like business at CDW might be ramping up soon.

PNE Industries Ltd - Cashing it in

2015-08-07T19:35:00.004-07:00

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]

Asia Enterprises Holding Limited - Tough like a steel rod

2015-07-12T03:03:00.002-07:00

Asia Enterprises Holding Limited (A55.SI) - Tough like a steel rod

Let me introduce AEH. Asia Enterprises Holding Limited is an old school steel supplier company in Singapore. (AEH Website) " With roots that date back to 1961, Asia Enterprises is a major distributor of steel products to industrial end-users in Singapore and Asia-Pacific. Over the past 39 years, the Group has continually expanded its product range and enhanced its value-added services to offer a 'one-stop' solution to its customers. Today, Asia Enterprises supplies over 1,200 steel products to more than 700 active customers involved primarily in marine and offshore, oil and gas, construction as well as the precision metal stamping, manufacturing and engineering/fabrication industries. The Group has forged a strong reputation as a reliable distributor of steel products to the marine and offshore industries."

Ok so what's so good about this stock? The sector which this company makes money from has become pretty bad, with oil prices tanking, shipping in the doldrums and Singapore property construction slowing down. In fact, the most recent financials show that AEH just made a loss this quarter! Yes a small loss of $0.017c, slightly more than their dividend payout for this year! Which means things look pretty scary for it at the moment. With problems brewing in China and Greece, things aren't looking too hot either going forward.

On the bright side, at the current price of $0.21, it is looking attractive. Let's have a quick look :

Net cash : 85.46% of Market Cap with NO DEBT (AEH has also been ramping down its business and reducing inventory/receivables in the past year, hence the large amount of cash it has.)

Discount to NAV : 31%

Div yield : 7.14% (yes AEH is pretty generous even in lean times, rewarding shareholders with a bigger div than last year, which was less than usual due to business being poor.)

As you can see, the balance sheet is rock solid and management consists of an experienced conservative bunch knowing how to hold down the fort during tough times. Currently trading volume is VERY VERY thin. Which is another plus. Though the dividend may be reduced or cancelled if the company continues losing money, pretty confident that should the markets for AEH's steel recover, AEH will definitely be ready to capitalize on it and start bringing the cash in.

[author holds shares in this company]