With the current surge in share price, congratulations to all who have chosen the dividend scrip option.
I m quite amazed at how much the share price has increased over the last week.
It certainly pays to be discover a under value gem and be patient.
DMG OSK has come up with an initiation report on MTQ - one of the first brokerages to cover the Company since 2008.
http://www.remisiers.org/cms_images/rese...140113.pdf
Their TP of $1.66 and DCF value of $2.00 sound rather too optimistic! But it is a good 22-page report which explains the business and provides thoughtful assumptions for the future of the business.
MTQ closed at $1.26 today with 1.62 million shares traded.
Rerating of the PE of a business. Although the business has stayed roughly the same, the market is now willing to give a higher PE for it.
Mr Market is indeed unpredictable.
(15-01-2013, 09:25 AM)yeokiwi Wrote: [ -> ]Rerating of the PE of a business. Although the business has stayed roughly the same, the market is now willing to give a higher PE for it.
Mr Market is indeed unpredictable.
I don't quite agree that the business has stayed roughly the same. MTQ had invested in their Bahrain facility since 2010, and have been growing their presence in the middle East in the last few years. They also had a tie-up with Bosch to boost their Engine Systems division and also had a few M&A within Australia.
In the last year or so, they also acquired Premier Land and Sea to complement their existing business, while taking on debt to fund their acquisition (on-going) of Neptune Marine Services in Australia.
So even if the market had not assiged a higher PER (for perceived faster future growth), the business would have continued to grow steadily and contribute to higher levels of EPS and cash flows.
(15-01-2013, 01:49 PM)Musicwhiz Wrote: [ -> ] (15-01-2013, 09:25 AM)yeokiwi Wrote: [ -> ]Rerating of the PE of a business. Although the business has stayed roughly the same, the market is now willing to give a higher PE for it.
Mr Market is indeed unpredictable.
I don't quite agree that the business has stayed roughly the same. MTQ had invested in their Bahrain facility since 2010, and have been growing their presence in the middle East in the last few years. They also had a tie-up with Bosch to boost their Engine Systems division and also had a few M&A within Australia.
In the last year or so, they also acquired Premier Land and Sea to complement their existing business, while taking on debt to fund their acquisition (on-going) of Neptune Marine Services in Australia.
So even if the market had not assiged a higher PER (for perceived faster future growth), the business would have continued to grow steadily and contribute to higher levels of EPS and cash flows.
What is the difference between MTQ now and MTQ in december?
(15-01-2013, 01:51 PM)yeokiwi Wrote: [ -> ]What is the difference between MTQ now and MTQ in december?
For one thing, they extended their acquisition of NMS. And another thing is - DMG came up with a report which acted as a catalyst for re-rating.
Specifically, you had not mentioned your timeline when you said the business had "stayed roughly the same".
I think an important aspect of investing is to purchase a business at low valuations and with growing earnings/cash flow. If the business gets re-rated, it will be a higher multiple on top of a higher EPS.
Regards.
(15-01-2013, 01:59 PM)Musicwhiz Wrote: [ -> ] (15-01-2013, 01:51 PM)yeokiwi Wrote: [ -> ]What is the difference between MTQ now and MTQ in december?
For one thing, they extended their acquisition of NMS. And another thing is - DMG came up with a report which acted as a catalyst for re-rating.
Specifically, you had not mentioned your timeline when you said the business had "stayed roughly the same".
I think an important aspect of investing is to purchase a business at low valuations and with growing earnings/cash flow. If the business gets re-rated, it will be a higher multiple on top of a higher EPS.
Regards.
NMS is still an unknown. Even the Bahrain facility is still not generating profit. The premier group is a good acquisition though but it probably does not worth a 40cts increase in share price. Personally, I would think that MTQ business is really about the same.
Without a re-rating(which by itself is rather puzzling..), it is hard to see MTQ at $1.30.
(15-01-2013, 02:18 PM)yeokiwi Wrote: [ -> ]Without a re-rating(which by itself is rather puzzling..), it is hard to see MTQ at $1.30.
Which is why I will not purchase more at such levels - optimism has already been priced in. However, I also will not make a case for it being over-valued. If events do come to pass, then it would justify the current valuation.
So the best thing to do now for me is to watch and monitor business developments.
I think it is relevant to note that in MTQ we have a competent management team who are experienced operators of the 2 existing core businesses, as well as quite smart managers in acquiring new related businesses to grow the overall base.
Under Senior Kuah's guidance, I bet the new Bahrain facility will soon achieve cash break-even. Given enough time, it should become a good earner as the business is really an extension of what MTQ does best in Singapore.
As for NMS, I guess we have in it quite a lot more growth and profit potential when its Aussie management team with the support from MTQ finally turns the business around. We should bear in mind hat MTQ has bought into NMS at a very good price, relative to even the written-down values of the underlying assets. So in a sense, by having bought a now 80% controlling stake in NMS at a good price, MTQ management has already added value to its shareholders, even before NMS returns to a decent profitability.
I guess Mr Market has now started to look into the future and potential of MTQ as an enlarged group.
is it still worthwhile to hold mtq now?