Valuetronics Holdings

Last year, Valuetronics started their dividend policy of paying out 30-50% of their profit. Based on the results so far, the dividend should be around 12-20 HK cents. Is this good enough for you?

The raise in the share price is likely due to 3 factors,

1. The successful positioning of the company future in Industrial & Commercial products, and the increase in the number of customers from this area.

1. The lower dependency on Phillips to overall revenue/profit. This is the main reason for the drop last year, so with the fear gone, the price is recovering.

2. The raising US$. The reporting is in HK$, which is tied to US$. So the result and dividend are naturally better if convert to SGD, which is the trading currency.

This happened 29 dec 2014 but was not mentioned in this forum yet: Executive Director and co-founder Mr. Chow Kok Kit sold 36 mln of his 64.7 mln shares to undisclosed parties (or the market?). His interest going from 17.28% to 7.67% of the total company shares.

Why would he do so at a point when the share price seems very cheap based on simple price ratios? No explanation whatsoever from Valuetronics.

Without a valid explanation this is a major red flag to me.

(25-02-2015, 01:04 PM)jaco Wrote: This happened 29 dec 2014 but was not mentioned in this forum yet: Executive Director and co-founder Mr. Chow Kok Kit sold 36 mln of his 64.7 mln shares to undisclosed parties (or the market?). His interest going from 17.28% to 7.67% of the total company shares.

Why would he do so at a point when the share price seems very cheap based on simple price ratios? No explanation whatsoever from Valuetronics.

Without a valid explanation this is a major red flag to me.

Thanks for pointing this out. Probably no one bothers to post when share price is going down, when price up you will suddenly get all the "feel good" posts.

The directors had been selling their stakes since 2009 or 2010, so this is not really surprising. Now out of the 3 key appointment holders, only the Chairman is left with most of his share unsold, and he only made a bulk sales once.

Out of all the directors sales, only happened that the CHairman's sales lead to bad news within the company. Was the sales a coincidence, or is it deliberate, I can't tell. But the rest of the bulk sales are suka suka sell. And the shares were tend to be sold when the prices were low. Sold already price also possibly goes up, next quarter revenue also possibly better, like this one.

So I will prefer to watch the Chairman's move, rather than the rest of the directors.

DMG published an initiation report yesterday with a TP of S$0.64. what puzzles me is that with half of the company being cash and the company continues to be operating cash flow positive, why is the share price at such depressed levels of valuation, about 2.5x P/E ex-cash.

would be good to hear about some of the seasoned investors here think, thanks!

(03-03-2015, 11:32 PM)(cy) Wrote: DMG published an initiation report yesterday with a TP of S$0.64. what puzzles me is that with half of the company being cash and the company continues to be operating cash flow positive, why is the share price at such depressed levels of valuation, about 2.5x P/E ex-cash.

would be good to hear about some of the seasoned investors here think, thanks!

2 main reasons:
1 An inexperience analyst made a wrong call that the Phillip business will be gone and have a sell call with very low target
2 One of the founding exe-director sold his share recently

This sort of things happened and provide us with a chance to buy cheap. Good to be paid with high dividend, while waiting for the company to grow with potential M&A with their large cash. Note that they have recently change the Board member to prepare for aquisition.

(04-03-2015, 09:59 AM)DCF Wrote:

(03-03-2015, 11:32 PM)(cy) Wrote: DMG published an initiation report yesterday with a TP of S$0.64. what puzzles me is that with half of the company being cash and the company continues to be operating cash flow positive, why is the share price at such depressed levels of valuation, about 2.5x P/E ex-cash.

would be good to hear about some of the seasoned investors here think, thanks!

2 main reasons:
1 An inexperience analyst made a wrong call that the Phillip business will be gone and have a sell call with very low target
2 One of the founding exe-director sold his share recently

This sort of things happened and provide us with a chance to buy cheap. Good to be paid with high dividend, while waiting for the company to grow with potential M&A with their large cash. Note that they have recently change the Board member to prepare for aquisition.

Let me add a little of my own input.

Other than the points mentioned, other factors that could be stumping the share price are follows:

1. The possibility of Philips stop doing business with them in the future.

2. Historical mistake by the company with licensing.

3. The stagnant revenue and margin and profit.

4. Lack of surprises.

5. The boring industry it is in.

If you believe in the company, just buy at a price that you are happy with. It will need some surprising news to bring it to the next level.

(25-02-2015, 01:04 PM)jaco Wrote: This happened 29 dec 2014 but was not mentioned in this forum yet: Executive Director and co-founder Mr. Chow Kok Kit sold 36 mln of his 64.7 mln shares to undisclosed parties (or the market?). His interest going from 17.28% to 7.67% of the total company shares.

Why would he do so at a point when the share price seems very cheap based on simple price ratios? No explanation whatsoever from Valuetronics.

Without a valid explanation this is a major red flag to me.

When I was a SH, the constant share sale by management was one of my concerns
I don't think they try to time their sales, ie not trying to sell when they think share price will drop in the near future
Rather, because they get cheap share options annually, they have to exercise n sell regularly. This forms part of their remuneration except that it's not paid directly by $$$ but indirectly by other SHs
If they didn't sell, after a few years their share holdings build up because of the options, then when they do sell it'll be a disaster

(04-03-2015, 01:45 PM)GFG Wrote:

(25-02-2015, 01:04 PM)jaco Wrote: This happened 29 dec 2014 but was not mentioned in this forum yet: Executive Director and co-founder Mr. Chow Kok Kit sold 36 mln of his 64.7 mln shares to undisclosed parties (or the market?). His interest going from 17.28% to 7.67% of the total company shares.

Why would he do so at a point when the share price seems very cheap based on simple price ratios? No explanation whatsoever from Valuetronics.

Without a valid explanation this is a major red flag to me.

When I was a SH, the constant share sale by management was one of my concerns
I don't think they try to time their sales, ie not trying to sell when they think share price will drop in the near future
Rather, because they get cheap share options annually, they have to exercise n sell regularly. This forms part of their remuneration except that it's not paid directly by $$$ but indirectly by other SHs
If they didn't sell, after a few years their share holdings build up because of the options, then when they do sell it'll be a disaster

Sounds like such a good deal for the management.

High cash balance not always good, it depends on the reasoning............for valuetronics, high cash balance is actually the rainy day fund for credit crunches and meant for such purposes instead of relying on banks

So why always depend on cash balance for valuation is beyond me.......should go by earnings