XMH Holdings

[CityFarmer]

Hi all, I've considered but am half-hearted about investing in this company as the net earnings seem to be declining the last 3 years - $11.4M (FY13), $6.13M (FY14) and $5.43M (FY15). Does anyone know why they spent so much on CAPEX ($24.8M) in FY15 to pay for the factory in Tuas, not counting the pre-payment for the lease of the land? On one hand the acquisition of MPG and Z-Power seems to be good moves, but on the other hand, cash is dwindling and debt has risen at a time when the industry is under considerable stress. Would any forrumer care to share your assessment of this business?

The main reason for the downtrend, is its core biz in Indonesia. It is real bad, based on my record. FY2015 XMH (core biz) downed more than half (43 mil) from the previous peak (98 mil in FY2013). The merits of its biz model, are light fixed asset, and negative WC. It is still profitable, even under the adversity. I am taking the current state, as part of biz cycle, rather than structure issue.

The Capex is mostly on subsidiaries acquisition, not all on Tuas facility. It is only few million S$ spend on the Tuas facility, which is necessary, as biz expanded, IMO.

The two acquired subsidiaries, are contributed positively. I saw synergies, and both are having ROI > 23% @ purchased price in FY2015. Both should worth more than acquired cost, IMO

(sharing a view, and accumulating at a greedier price )