China Stationary - how to value this company?

From a traditional valuation matrix, China Stationary is screaming value value value! But for the "China" factor.. it should be worth a hell of alot more.

Based on its 2012 audited account and its Q1 2013 result announcement, I see a few very attractive point about the company:

1) Strong net operational cashflow generation 
Approximately RM291 million in FY 2012 [and RM79 million in Q1 2013 (RM316M annualised)] against RM33million in investing cashflow giving it approximately RM258 million in free cash flow per annum..

2) Strong balance sheet... 
Its audited cash balance at 31 December 2012 is approximately RM 944 million against total liability of approximately RM110 million, giving a net cash position of RM 834 million. There's also various receivable, inventory, fixed asset.. but for the purpose of this exercise I've assumed no recoverable value from these assets.

3) Dividend 
Based on its short track record listed on Bursa, they've been paying regular dividend... 0.018 interim dividend was granted back in October 2012 and another 0.016 will be approved as final dividend.. giving a total dividend of 0.034, which is a yield of approximately 9.7% based on the current price of approximately 0.35.

These dividend are paid out of operational cashflow.

4) Earning yield
Based on 2012 audited account, the company generated approximately RM232million of profit. Based on current price of RM0.35, the PE is less than 1.9X.

5) Discount against IPO price.
It was listed back in Feb 2012 at RM0.95 which is approximately 4.75X historic PE. Current price is only 0.35.

6) Active purchase by major shareholder in open market.
There have also been a series of purchase by its major shareholder from the open market.. however this is also a downside, based on 2011 annual report, the free float of the share is way below 30%....


Conclusion - I don't generally like companies with poor corporate governance issue. But just like how you can overpay for a good company, there should be a price where a lousy company can be a good buy. Well that's the theory anyway, I have bought a little bit of this counter but with a very experimental mindset to this investment.

It's so cheap I can't understand it.

YTLP buyback -update

Following my last post on YTLP buyback, the company have continued to be active in the market to buyback its share.

Its cumulative net outstanding treasury share as of 30 May 2013 is 166,347,745 shares.

On 9/5/2013 - the company have approximately 137,324,245 treasury share outstanding representing approximately 1.86% of the total outstanding share.

This represent an additional buyback of 29,023,500 shares from the open market. Assuming at an average price of RM1.51, the buyback is worth RM43,825,485 this month.

Today's announcement.

Weida - Q4 2013 announcement

Following my post on Weida back in February 2013 the share price have been pretty unexciting until the past 2 weeks following the general election result when it finally broke 1.40 to trade around 1.70.

Anyway, getting back to the fundamental.. the company have just announced its Q4 2013 result and I believe it is looking very solid.

After receiving the proceed from the disposal of its plantation land, the company is now sitting on a cash balance of RM264 million, it's market cap is approximately RM 225million as of closing today.

It's net asset is RM2.74 and current closing price is RM1.71, giving a PB of 0.62

Earning from continuing operation is approximately RM20 million, giving it a PE of approximately 11X.

Actually I was expecting more cash proceed from the disposal, having looked at the circular again I am not really sure where I missed out. Per the circular, the expected gain on disposal is RM120+million, however I can only find a RM60million gain on the 12 months P&L. Something doesn't seem consistent with the equity account presented in the circular against the current quarter announcement..
But the mistake is probably mine.

Nevertheless, given the company's upcoming venture into property development and its solid foundation in its current business, I think Weida is a decent inclusion in my portfolio at this stage. I will look to par down some stake somewhere around RM2.50 (0.9 to PB/15XPE)..

YTLP's 4G push - a perspective from its CEO.

Great article in The Edge today shedding some light on the 4G's push by YTLP.

Basically the rollout delay is a calculated one due to limited ecosystem for devices operating in the 2.6Ghz spectrum (iPhone operate on 1.8gHz spectrum).

China and India have indicated that they will operate on the 2.6gHz spectrum but they have not started auctioning the spectrum.

Interestingly the CEO was quoted to have said that they are ready to deploy LTE on its WiMAX network. My hope as an investor is that their WiMax network is LTE ready without another round of heavy capital expenditure.

YTL Power - buyback mode worth RM116million since March 2013.

Over the past 3 months, I've not actively kept track of my holding in YTLP. With the election fever in the past months, the stock have not been terribly active.

However, having looked at the counter earlier today, I notice substantial share repurchase by the company since 4 March 2013.

On 4/3/2013 - the company have approximately 56,725,145 treasury share outstanding representing approximately 0.8% of total outstanding share.

On 9/5/2013 - the company have approximately 137,324,245 treasury share outstanding representing approximately 1.86% of the total outstanding share.

This represent a net purchase of approximately 80,599,100 shares. Assuming an average purchase price of 1.45 - this represent a buyback worth RM116,868,695. 

I view this development as a very positive move for minority shareholder as it will increase EPS assuming no change in operating environment.

The company generate > RM2b in operational cashflow annually. They can certainly afford to buy back more shares at this price.