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(16-08-2013, 07:10 AM)Greenrookie Wrote: [ -> ]Mill,

The cash might improve as inventory and receivables have improve, I am more concerned about earnings and the margin. It's will be quite clear by the next quarter if this dip is just one off, I had expected better or at least flat results as carrier have a new line/ series of container fridge, amd they are bullish about the sales for this fridge for this year, but the numbers from nam lee is actually worse off, although I do not have the specific breakdown of contribution by this major customer, it is definitely significant (at least 50% on my own estimate), so the numbers are really puzzling. The revenue is flat, and if the gp margin erosion is due to the hdb/ housing projects, that means reefer orders actually fall!! Chk past quarters and there is no seasonality Factor here. So yes, I am concerned. Next quarter results will be make or bye bye for me.

If you bye bye so fast means you have not valued it correctly in the first place. Only buy a counter if can decide to hold it more than 1 year. otherwise wont be investing, just trading/speculating Big Grin
How long I hold sometime is not important to me, the fundamental is, I didn't buy this on a turnaround story so there is nothing for me to wait for. If fundementals remain the same, we can keep as long as we like. Business is dynamic and hence valuation is never static
BALANCE SHEET
Inventories increased from S$35.2 million as at 30 September 2012 to S$44.1 million as at 30 June 2013, mainly due to projects picking up pace.
Trade debtors increased from S$24.6 million as at 30 September 2012 to S$34.4 million as at 30 June 2013 mainly due to higher sales of S$44.1 million for
3Q13 as compared to sales of S$30.4 million for 4Q12.
Trade creditors, other creditors and accruals decreased from S$19.5 million as at 30 September 2012 to S$15.9 million as at 30 June 2013 due to shorter
payment term for certain projects.
Cash and cash equivalents decreased from S$52.8 million as at 30 September 2012 to S$26.1 million as at 30 June 2013 mainly due to payment of S$4.8 million
dividend, investment of S$6.2 million in quoted bonds and increase in working capital of $15.1 million.

10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the
group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months

Although the recovery of Europe and United States economies is slow, it is still expected to have a positive impact on the aluminium industry business.
The cooling measures on the property market introduced by Singapore government are expected to have a negative impact on the building product business.

The Group expects the competition in the building products industry and the increasing cost in the operating environment will continue to exert pressure on
profit margins.
Pretty shocking fourth quarter. Annoyingly, the company always reports YTD numbers so you need to subtract the 9 month #s from the full year #s to get to Q4. As far as I can see :

Revenues : $47.3MM (up from $44.1MM in Q3 and the highest quarter for the year)
Gross profit :$4.9mm (down from $5.8MM in Q3 and around $7.5MM in each of the first two quarters)
Operating profit : $0.7mm (down from $1.4MM in Q3. $3.6MM in Q2 and $3.1MM in Q1)
Net income : $2.8mm (vs $0.8MM in Q2, $2.7MM in Q2 and $2.5MM in Q1)
EPS : 2.538 cents (vs $.3 in Q3, 2.2 in Q2 and 3 inQ1)

The net income, for the quarter, would have been much lower were it not for a $1.9MM tax write back due to over-provisioning the prior year.

So, revenue wise, the company continues to grow($170MM full year vs $155MM last year) but profits are down (full year net income of $8.9MM vs $13.8mm last year).

As usual, the company does not split out the container cooler revs from the HDB business (both aggregated in the Aluminium business) so we have no update as to whether the container business is turning around (that would be the big upside).

The company ascribed the lower profitability to one unprofitable contract that is now substantially finished. So there could be a return to more normal margins the coming financial year but the company does warn of a slow down in the property market as well as increased competition driving down margins. On a more positive note, the dividend was only cut by 25% from 2 cents to 1.5 cents so a decent 4.5% yield at the current share price of 32 cents. Company remains debt free and has NAV of 48.3 cents so is trading at a substantial discount to NAV. Question is what will be the catalyst to narrow that discount…seems to me that we need a normalisation of margins for the next few quarters coupled with global growth in the cooled container biz which could occur as economic growth in Europe starts to pick up.
FY13 (ended 30Sep13) AR makes interesting reading.....
http://infopub.sgx.com/FileOpen/Nam%20Le...leID=20065 [FY13 AR]
and Nam Lee is extending the existing share buy-back mandate by another year.....
http://infopub.sgx.com/FileOpen/Nam%20Le...leID=20064 [Circular to Shareholders]

From reading the AR, it is quite clear that the lower reported NP in FY13 was mainly attributed to cost overrun in a major one-off project already completed (possibly Jems?). The stronger sales in 4Q and the higher year-end inventories and trade debtors balances do give confidence of better sales and cash collections to come in the next few quarters. Latest B/S as at 30Sep13 remained rock-solid and very liquid.

I now look forward to the total $0.015/share Final & Special dividends, which should be paid by end-Feb14.
(15-01-2014, 01:53 PM)dydx Wrote: [ -> ]FY13 (ended 30Sep13) AR makes interesting reading.....
http://infopub.sgx.com/FileOpen/Nam%20Le...leID=20065 [FY13 AR]
and Nam Lee is extending the existing share buy-back mandate by another year.....
http://infopub.sgx.com/FileOpen/Nam%20Le...leID=20064 [Circular to Shareholders]

From reading the AR, it is quite clear that the lower reported NP in FY13 was mainly attributed to cost overrun in a major one-off project already completed (possibly Jems?). The stronger sales in 4Q and the higher year-end inventories and trade debtors balances do give confidence of better sales and cash collections to come in the next few quarters. Latest B/S as at 30Sep13 remained rock-solid and very liquid.

I now look forward to the total $0.015/share Final & Special dividends, which should be paid by end-Feb14.

I agree and believe the next few quarters should see better numbers.

I am however, rather uncomfortable with a few facts.

1) Is the contract with carrier going to be renewed? They mentioned the bulk of the revenue is from the building and infrastructure products, what happen to the container boxes? Carrier is doing booming business, why has it not translate to numbers to Nam Lee?

2) "The Group’s building products business is bracing for negative impacts to its operating environment from the slowdown in Singapore’s property market and coupled with an increasing number of competitors. " With the construction boom attracting competitors, which really wonder what happens when demand tapers off. Already, if you look at BCA 2014 forecast in construction, the big fall in private construction demand is due to the property cooling measures, and HDB is tapering off too.

I have bought into Nam Lee partly because it is the sole supplier to carrier, granted margins might not be good, but at least the contract would have locked out other competitors. If the contract is not going to be a 5 year contract, or worse, not renewed, then the business outlook is going to be quite dark.

Enquiry to Nam Lee through email draw a blank.

Vested, but rethinking about its longer term prospect
Greenrookie,
To get the answers to your questions, I encourage you to make time to attend the coming AGM and ask the board members.
Alas, working lei... U going? Or Ang buddies going? Can ask?
For those who couldn't attend the AGM, here is the minutes from NextInsight.

http://www.nextinsight.net/index.php/sto...payout-etc
Nam Lee's 1H 2014 results are out :

http://infopub.sgx.com/Apps?A=COW_CorpAn...1Q2014.pdf

At first brush the 1H year on year numbers don't look great :

Sales : $78.855 vs $79,358
Gross Profit : $12,597 vs $15,079
Operating Earnings : $3,431 vs $6,732
Net Income : $3,186 vs $5,306

As usual, they don't break out the numbers by quarter but reconstructing them, I get the following :

Revenues :
Q1 2013 : $37,146
Q2 2013 : $42,212
Q3 2013 : $44,110
Q4 2013 : $47,330
Q1 2014 : $42,000
Q2 2014 : $36,755

Gross Profit (margin) :
Q1 2013 : $7,330 (19.7%)
Q2 2013 : $7,749 (18.4%)
Q3 2013 : $5,839 (13.2%)
Q4 2013 : $4,916 (10.4%)
Q1 2014 : $5,850 (13.9%)
Q2 2014 : $6,747 (18.4%)

Operating Income (Margin)
Q1 2013 : $3,106 (8.4%)
Q2 2013 : $3,626 (8.6%)
Q3 2013 : $1,475 (3.3%)
Q4 2013 : $ 721 (1.5%)
Q1 2014 : $1,839 (4.4%)
Q2 2014 : $1,592 (4.3%)

Net Income (Margin)
Q1 2013 : $2,519 (6.8%
Q2 2013 : $2,787 (6.6%)
Q3 2013 : $ 932 (2.1%)
Q4 2013 : $ 2,790 (5.9%)
Q1 2014 : $1,863 (4.4%)
Q2 2014 : $1,323 (3.6%)

What is interesting is that the gross margin has recovered significantly over the past three quarters (from a low of 10.3% in Q4 2013 to 18.4% in Q2 2014) which you would expect since the company had attributed poor earning in 2H 2013 to cost overruns of one construction contract (undisclosed which one but on Next Insight there was speculation that it was related to JEM). That contract is finished and gross margins have bounced back. Unfortunately, sales are down so operating and net income margins are suffering as SG&A costs have not come down correspondingly.

The company continues to be cautious in its outlook :

"Although the outlook for global economy remains uncertain, the Group expects the aluminium industry business to contribute positively to the performance of the Group.
The slow down in the local property market, coupled with new entrants to the market, are expected to have some impact on the Group's building products
business.
The Group expects that the increasing costs in the operating environment and market competition will continue to exert pressure on profit margins."

With gross margins having, seemingly, reverted back to normal, we will now have to wait to see if they can either boost sales or cut SGA to get profits back to an acceptable level again. On an NAV basis, the stock continues to look exceptionally cheap (30 cents share price vs 47.2 cents NAV) but on an 8x historical PE and 10x trailing 12 months PE it looks less so. Dividend was cut in 2013 to 1.5 cents (previously 2 cents) to still give a respectable 5% yield and given that the company is debt free, I would expect dividends to continue.

(vested)
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