Never ever rule out the possibility of losses from core business, and by then do we still expect the same amount of dividend? If you are buying Hupsteel to own for the next 20 years, then just click buy and don't get too attached to the share price, because you may experience some bumpy ride in the coming years. I like to catch the bottom, and thus I agreed with brattzz on the theory of "slowly accumulate when below sub-20cts".
Don't get me wrong, Hupsteel is a deep undervalued company, and it may not go below 20c.
(16-12-2014, 10:39 PM)valuebuddies Wrote: [ -> ]Never ever rule out the possibility of losses from core business, and by then do we still expect the same amount of dividend? If you are buying Hupsteel to own for the next 20 years, then just click buy and don't get too attached to the share price, because you may experience some bumpy ride in the coming years. I like to catch the bottom, and thus I agreed with brattzz on the theory of "slowly accumulate when below sub-20cts".
Don't get me wrong, Hupsteel is a deep undervalued company, and it may not go below 20c.
Based on quantitative analysis, yes it is "undervalued"
But several of these companies in these commodities type of businesses will always be "undervalued"
I used to own one of its peers: Asia enterprises holdings, which I'd argue is a lot stronger financially and much more stable (>20yr record of profitability through multiple crises)
However, the one glaring problem is simply that the business itself is a lousy business. There is absolutely nothing to differentiate one of these steel stockists from the other except price.
Yes, one company can be better by being better managed financially, having a stronger network etc but there really is no real lasting moat.
I subsequently divested after 2 years, and although I made a good profit (about 18% return each year for 2 years, dividends included), the lesson I learnt is that companies in this type of industry can be "safe" and you can see it as a dividend yielding type of instrument (much like a bond), but the "undervaluation" is a mirage. They will stay undervalued. In fact, if any of these stockists are trading even close to their book value, I'd say its way overvalued!
"about 18% return each year for 2 years, dividends included" waos! why did u sell? i would make it a significant portion of my portfolio!!
(20-12-2014, 08:13 PM)brattzz Wrote: [ -> ]"about 18% return each year for 2 years, dividends included" waos! why did u sell? i would make it a significant portion of my portfolio!!
Because it went up substantially in early 2013 when inflation was higher and china was still chugging along nicely and steel prices were elevated
If I had held on to it, returns would be mediocre. In fact the share price is lower than it was 2yrs ago
When I sold, it was still at a substantial discount to book value, FCF was reasonable etc.
lesson learnt is that these type of businesses at the RIGHT PRICE is ok, but not fantastic. They aren't going to invent a new way of stocking steel that others cannot copy.
Of course, at the right price, u may still get good returns but it must be a really crazy price
A lot of properties went up today, probably due to the "lift" from the Keppel Land privatization deal..., except Hupsteel...
So, this should be sufficient telling sign of what Mr Market thinks of this counter..
how about HS REITs their industrial properties with europe QE funds?
that would be a kicker, won't it?
Haha. Guess if centurion can do it. Why not Hupsteel.
REITs are really popular nowadays.
For Hupsteel,
1. Debt-free; thus immune to rising interest rate
2. At 19.5 cents, Cash, AR and inventory are substantial and forms almost the current market capitalization. The balance sheet is clean as Cash is liquid, bad debts has been minimal, little sign of inventory impairment.
3. Development properties are recorded at cost/ valuation, with potential fair valuation gain of min $50m.
4. If the company revalues the properties at valuation, RNAV will be easily $250m. With a market capitalization of $120+m, the PB is 0.5
We should lobby to their CFO/ Management (ir@hupsteel.com) for
1. Resumption of share re-purchase
2. More cash dividend
3. Revaluation of investment properties on their balance sheet.
With free float of 45%, by constant lobbying for the above, I am sure we can make a difference to realizing the value.
nice try tulipsbubble,
BUT, lets NOT forget it's a conservative family biz... besides, we prefer to keep available cash in the co. for possible upturn/expansion of biz, OR, prolong down-turn of the steel biz...
I wouldn't buy in any shares at the moment, so i expect the co. not do so either.
Let re-consider share buy-in at 13 to 15 cts instead?
AND, i would delist the co. if the price drops to a ridiculous level...!!
Brattzz,
Conservative is good, but too conservative is not maximize the company's asset.
Such undervalued shares need share repurchase to push up the financial metric, and to support the share price.
If the company is able to benefit from economic upturn, taking some reasonable debts will be acceptable. This company is debt free and hoarding too much cash
Independent Director are engaged to strategize the company's directions and protect minority interest. Why aren't the directors encourage the continuation of share repurchase? Excess cash and undervalued shares.
I believe concerted efforts to lobby for changes in the company will be good to realize this shares' value.