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21-08-2020, 08:13 AM
Seeing that there has been analysis and TPs placed out there, I would like to form a TP of my own after the analysis done above.
I would look at the valuation of the company on a sum of parts basis. As mentioned above, I would estimate the current value on the Hydropower plants at roughly $33m ($0.077 per share) attributable to owners of the firm, so how about the rest of the firm.
As per 1H2020 Financials, profit attributable to equity holders of the company is $9.572m. Construction gross profit is $1.489m. The hydropower plants have a meshed participation of circa 33%, so taking the Hydropower portion of the business away would land at Revenue of $147.098m and profits of $9.08m for 1H2020. Let's then look at how 2H2020 is doing. >$32.4 in July with $88m on the orderbooks. I would hazard a guess that the 2nd half of the year would average $30m a month in revenue adding up to $180m. Using a net profit margin of 6.17% indicated by 1H2020 would arrive at $11.11m profits. Full year profits will be circa $20.19m.
So looking at the comparables mentioned (let's do away with any price movements upwards during this period of time).
Allied Motion Technologies 35.74x FY2020 Est
Rockwell Automation 30.82x FY2020 Est (larger player in PRC providing solutions and manufacturing their own parts)
Siemens AG 21.21x FY2020 Est (larger player in PRC providing solutions and manufacturing their own parts)
Altra Industrial Motion 22.94x FY2020 Est
Hiwin Technologies Corp 49.42x FY2020 Est
Omron Corp 42.7x FY2020 Est
If we tag valuations to
- the highest multiple of 49.42x, we will get $998m equity valuation ($2.32 per share) + Hydropower ($0.077 per share) = $2.40
- the lowest multiple of 21.21x, we will get $428m equity valuation ($1.00 per share) + Hydropower ($0.077 per share) = $1.08
- average multiple of 33.80x, we will get $683m equity valuation ($1.59 per share) + Hydropower ($0.077 per share) = $1.67
- KGI's multiple of 14.0x, we will get $283m equity valuation ($0.66 per share) + Hydropower ($0.077 per share) = $0.74
- CGS CIMB multiple of 10.0x of FY2021 assuming 10% growth Y-O-Y, we will get $222m equity valuation ($0.52 per share) + Hydropower ($0.077 per share) = $0.60
By all measures, the current $0.365 is really cheap. My own personal TP would be at the lowest multiple range which is $1.08 as I do believe that anything below that, we are probably better off holding the counter for a few years for the growth to manifest. This is a once in a lifetime pandemic resulting in a marked shift to industrial automation globally. The comparable basket shows it. Its just not showing in ISDN... yet. I am personally very excited about this counter as it is not much talked about even up till now. The more neglected a counter is, the more likely it is undervalued.
I would look at the valuation of the company on a sum of parts basis. As mentioned above, I would estimate the current value on the Hydropower plants at roughly $33m ($0.077 per share) attributable to owners of the firm, so how about the rest of the firm.
As per 1H2020 Financials, profit attributable to equity holders of the company is $9.572m. Construction gross profit is $1.489m. The hydropower plants have a meshed participation of circa 33%, so taking the Hydropower portion of the business away would land at Revenue of $147.098m and profits of $9.08m for 1H2020. Let's then look at how 2H2020 is doing. >$32.4 in July with $88m on the orderbooks. I would hazard a guess that the 2nd half of the year would average $30m a month in revenue adding up to $180m. Using a net profit margin of 6.17% indicated by 1H2020 would arrive at $11.11m profits. Full year profits will be circa $20.19m.
So looking at the comparables mentioned (let's do away with any price movements upwards during this period of time).
Allied Motion Technologies 35.74x FY2020 Est
Rockwell Automation 30.82x FY2020 Est (larger player in PRC providing solutions and manufacturing their own parts)
Siemens AG 21.21x FY2020 Est (larger player in PRC providing solutions and manufacturing their own parts)
Altra Industrial Motion 22.94x FY2020 Est
Hiwin Technologies Corp 49.42x FY2020 Est
Omron Corp 42.7x FY2020 Est
If we tag valuations to
- the highest multiple of 49.42x, we will get $998m equity valuation ($2.32 per share) + Hydropower ($0.077 per share) = $2.40
- the lowest multiple of 21.21x, we will get $428m equity valuation ($1.00 per share) + Hydropower ($0.077 per share) = $1.08
- average multiple of 33.80x, we will get $683m equity valuation ($1.59 per share) + Hydropower ($0.077 per share) = $1.67
- KGI's multiple of 14.0x, we will get $283m equity valuation ($0.66 per share) + Hydropower ($0.077 per share) = $0.74
- CGS CIMB multiple of 10.0x of FY2021 assuming 10% growth Y-O-Y, we will get $222m equity valuation ($0.52 per share) + Hydropower ($0.077 per share) = $0.60
By all measures, the current $0.365 is really cheap. My own personal TP would be at the lowest multiple range which is $1.08 as I do believe that anything below that, we are probably better off holding the counter for a few years for the growth to manifest. This is a once in a lifetime pandemic resulting in a marked shift to industrial automation globally. The comparable basket shows it. Its just not showing in ISDN... yet. I am personally very excited about this counter as it is not much talked about even up till now. The more neglected a counter is, the more likely it is undervalued.
Please do your own due diligence. Any reliance on my posts is at your own risk.