It is going to be a tough business, from what I see....
MOS has to be very high for family owned business as privatization can be at significant discount. Shrewd people may even drive down the price through MEANS before discount.
(27-08-2015, 08:47 AM)axt Wrote: [ -> ]http://infopub.sgx.com/FileOpen/ResultsQ...eID=367210
0.1c dividend declared.
"The Group is not optimistic of returning to profitability in the next reporting quarter."
Asia Enterprise also made comments on losses for next quarter. What caught my attention wasÂ
"the Group believes that it has the necessary resources to weather out the sluggish market and is ready to seek out business opportunities within and beyond its steel business."
Beyond its steel business? What are they thinking of going into? Is this the first time they made such statements? Or are they referring to the newly renovated Kim Chuan warehouse rental business?
it is not the first time they made such a statement. read my report...the company made and follow through on similar statements in prior annual reports. HupSteel is truly a rare opportunity to buy a transformative business at such a discounted valuation.
https://drive.google.com/open?id=0B9AWU1...EFzWUdkeDg
Even though the company reported huge IFRS losses, it is mostly due to goodwill impairments and provision for doubtful debt. The company actually generated $10.6m in cash. I would rather have economic cash than accounting profit.
People think collapsing revenue is a bad thing...but it is actually a pretty bullish case. The company is trading at a massive discount to its adjusted liquidation value....thus collapsing revenue represents a slow liquidation...which is again...a bullish case.
Hi bluedogmeow, could you explain what you mean by transformative business? Means steel to other business? What business, any thoughts?
Thanks.
real estate...it is stated in the 2013/2014 and recent announcement. this is conjecture...but I believe it is possible this company is attempting to transform itself to a debt laded RE, at least that is what I would do.
The company has valuable real estate valued at ~$84 million, which by the way I think is undervalued based on my own 3rd party review, but yet has a huge cash balance. I would use the value of the real estate as collateral and the existing cash balance to fuel an RE acquisition spree. Assuming a 50% LTV, the company can purchase up to $200m in RE.
Assuming the company is able to continue liquidating its WC and sell down its operating properties because there is no steel business to operate, I believe the company can add another $150m in RE.
So what we have is a company that has $430m in RE, and $215m in secured debt. If the company is able to draw a 6% yield on a 3.5% I/R expense, the company will generate $18.75m in pre tax returns. if it converts to a reits structure and trade at an 8% yield...that is a $240m in equity value...or a 140% upside.
Of course....this is conjecture...but it represents the upside potential the company has by implementing such an easy strategy.
if not...I believe the company is worth an easy ~90% upside on a dividend discount model + IV RE value...but the point is...the DDM value in itself translates to nearly 100% of the existing value...means you are literally getting a time and risk adjusted RE for free.
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heehee, let's see how it go.. it's a family biz..
