(03-04-2013, 10:31 PM)Bibi Wrote: [ -> ]The company looks cheap in PB sense but fairly valued base on PE. The management has a "good" history of making bad diversification ventures one after another. They are also very optimistic in projections but usually cant deliver.
1) "Though our charter (KS TITAN II) was recently terminated, we remain very confident of securing another charter for this vessel. " (AR 2009)
What happen?
"Our jointly held jack-up liftboat (KS TItan II) was off-hire for the entire year of 2010" (AR 2010)
2) "The decision to expand our services to include engineering, steelworks, and heat exchangers operations is definitely a positive step forward for the Group." (AR 2011)
What happen?
"Despite increases in revenue in the engineering division in FY2012, the revenue were not regular during the year and hence resulted in some unutilised capacity at the back of committed overhead costs. Margins were also squeezed as the industry slows down and the costs of employing foreign workers increases" (FY2012)
The company management people remains the same. I think they lack business foresight. Can we count on them to make the same mistakes, i bet they will.
Whatever you said is a fact. They did made mistakes in trying to diversify into non core areas, though some of these businesses seem to compliment their main business. That is business, there is always some risk involved, no such things as sure-win, sure-eat
. But to label the management team as lack of business foresight due to these recent business failure is really unjustified.
It is fair to go a little deeper and further in history to understand and judge this company.
Sinwa is a company with history that dates back to 1960s. From a humble beginning, its turnover now is more than $100 million a year. It has presence in 4 countries (Singapore, China, Australia and Malaysia), and more than 100 ports. To be able to grow into this size today in a highly competitive industry, I don’t see how a team that is lacking in business foresight can achieve that.
As far as I can remember, the company has been profitable every year until FY2012. They remain profitable in 2003 (SARS) and 2008 – 2009 (GFC). The loss in FY2012 was mainly due to the losses sustained from chartering business and engineering business, which they have since sold off.
The company has also been paying dividends every year with the exception in FY2010 and FY2012. And now they are paying a special dividends of 1.5c from the sales proceed of selling off the Liftboat KS TITAN 2. This dividends payable is about $5 million. I view this as a friendly gesture to shareholders.
The company is now back to its origin: logistic, supplies and agency. This is their forte. Based on FY 2012 and FY 2011 performance, this segment contributes about $6 million in profit or EPS of 1.8c. Based on today’s price of 15c, PE is about 8X.
In conclusion, with PE of 8X, NTA at 26c, yield of 10% (and that is assuming no dividends declare this year other than the 1.5c special dividends), and a long history in the business and a wide network in AP, you can judge if this is a company worth investing and the management worth their salt.