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Wednesday, April 25, 2018

Sembcorp Marine

Sembcorp Marine:

Key highlights: For the three months to March 31, 2018  Revenue of $1.18 billion. 
Net profit of totalled $5.3 million. 



EPS of 0.25 cents .
A drop if 86% as compared to last year EPS of 1.77 cents ( once-off gain ) .





NAV of 1.157
PE of 220 times (0.25 x 4).

Price seems very high at $2.23 per share.

I think It has overrun ahead of it's fundamental.

Not a call to buy or sell.
Please do your due diligence.

Secured $476 million in new contracts in 1Q 2018. Singapore, April 25, 2018: Sembcorp Marine posted Group revenue of $1.18 billion for the three months to March 31, 2018. This compares with $746 million in revenue generated in 1Q 2017 (restated for accounting changes on adoption of SFRS (I)). The higher revenue in 1Q 2018 was largely due to higher recognition on delivery of 2 jackup rigs to Borr Drilling and 1 jack-up rig to BOTL during the quarter. Excluding the effects on the adoption of SFRS(I) 15, revenue would have been $858 million, an increase of 15% compared with 1Q 2017.

Turnover for Rigs & Floaters was $1.02 billion in 1Q 2018, compared with $327 million in 1Q 2017 (restated for accounting changes on adoption of SFRS (I)). The higher revenue was related to recognition of the Borr Drilling and BOTL jack-up deliveries as well as higher floaters revenue on recognition of the Johan Castberg project. Offshore Platforms revenue was $62 million in 1Q 2018 compared with $302 million in 1Q 2017 due to completion of existing projects. During the quarter, revenue from the remaining work for the three topside modules for the Culzean platform topsides continued to be booked progressively. Delivery of the topside modules is scheduled for June 2018. Revenue from Repairs & Upgrades totalled $79 million for 1Q 2018 compared with $95 million in 1Q 2017 on fewer ships repaired. A total of 80 ships and other vessels were repaired or upgraded in the first quarter of this year compared with previously.


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Tuesday, April 24, 2018

Venture

Venture - from TA point of view, it is rather bearish! The current price of $21.80 has broken down the 20 days , 50 Days and 100 days Moving Average.



It is now going down to test it's 200 days Moving Average at around $20.76.




 If it is not able to hold at this support level then it may slide further down towards $20 then 19.67 level.



Thee selling down I think has been more or less due to not so rosy sales report for IQOS product.. I think is good time stay sideline and wait for it to be stabilised before taking and action.

 Result fir 1st quarter will be out this evening. All eyes are waiting for further insights/guidance.



 Not a call to buy or sell. Please do your due diligence.

Rolling EPS of 0.994
Rolling PE of 22 times
NAV of $7.08

Dividend of 60 cents.




Venture Corporation Limited, together with its subsidiaries, provides technology services, products, and solutions in the Asia Pacific. The company operates through Electronics Services Provider, Retail Store Solutions and Industrial, and Components Technology segments. It offers manufacturing, product design and development, engineering, and supply-chain management services to the electronics industry. The company also designs, manufactures, assembles, distributes, and trades in electronic, mechanical, and computer related products and peripherals; manufactures and sells terminal units; develops and markets color imaging products for label printing; designs, integrates, and trades in electronic security systems; and develops and supports information systems. In addition, it engages in the provision of manufacture, design, engineering, customization, and logistics and repair services; manufacture, design, fabrication, stamping and injection, metal punching, and spraying of industrial metal parts, tools, and dies; and design, customization, and marketing of tool-making and precision engineering solutions. Further, the company manufactures plastic injection molds and moldings with secondary processes and subassembly; and provides manufacturing services to electronics equipment manufacturers, as well as offers management services. Additionally, it imports and exports electronic parts, components, equipment, devices, and instruments. Venture Corporation Limited was founded in 1984 and is headquartered in Singapore.

ThaiBev

ThaiBev - Today it has a Beautiful white soldier with wide thrust bar appear on the chart, this is rather bullish!



Looks like it had hit the bottom after touching 78 cents and hovering near 79-80 cents before fund coming in with Full force and ramp up the share price Up 7.5 cents to 87.5 cents. Seems like the worst is over and we may likely see this bullishness continue to be played out in next few days.



This sudden upsurges of the price with super high volume could be expecting a better set of financial result .

I think it might be good to wait for the cincom result before taking further action.



Not a call to buy or sell.

Trade/invest base on your own decision.

ThaiBev - here goes my thoughts on Thai Beverage.
Thai Beverage has grown tremendously over the years from making many acquisitions to now being the largest beverage group in Thailand and also the leading beverage group in Southeast Asia.


 Thai Beverage is a company operating in four different segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages. One of their iconic acquisitions in recent years was the acquisition of Frasers and Neave, a large beverage group in Singapore. With this acquisition, Thai Beverage has cemented it's position as a leading beverage group in Southeast Asia.quote:Jeremyowtaip





Also, Thai Beverage not only expanded in size of operations through many acquisitions made, it has also diversified it's businesses to now owning four business segments namely spirits, beers, non-alcoholic beverages and food & restaurants. Another iconic acquisition made by them recently was the acquisition of all KFC franchisees in Thailand from Yum Brand to own a substantial stake in the food and restaurant business in Thailand.
I looked at their past decade trend in financials and my first impression even before I zoomed in on the specifics of each important metric is that I am 'wowed' by their trend in financials. Let us dissect this acquisition beast which have grown tremendously over the years to look at their interesting growth in the various metrics.


I will present their compounded annual growth rates (CAGRs) of the various important metrics below for the past decade from 2007 to 2017:
Total revenues CAGR = 7.26%
Gross profits CAGR = 6.95%
Operating profits CAGR = 5.6%
Net profits (adjusted for one-off items) CAGR = 9.7%
Total assets CAGR = 9.34%
Shareholders' equity CAGR = 9.21%
Operating cash flows CAGR = 6.05%
Free cash flows CAGR = 4.48%
Next, I will present a snap shot of some more metrics a decade ago in 2007 and recent in 2017:
Cash conversion cycle (days) = 138.57 (2007) vs 97.13 (2017)
Gross profit margin = 29.51% (2007) vs 30.58% (2017)
Net profit margin (adjusted for one-off items) = 10.33% (2007) vs 12.8% (2017)


Return on assets = 12.58% (2007) vs 13.4% (2017)
Return on equity = 19.32% (2007) vs 19.6% (2017)
Debt to equity ratio = 0.45 (2007) vs 0.47 (2017)
I will now discuss Thai Beverage's trend of financials over the past decade in the few important aspects of profitability, efficiency, liquidity and leverage to see how they have performed.


First on to their profitability. We see that the total revenues, gross profits, operating profits and net profits have all grown at mostly high single digits compounded growth rates over the past decade. Thai Beverage may not be a fast grower commanding strong double digits compounded growth rates, but it has grown at a respectable high single digits compounded growth rates in these metrics. If we look at the gross profit margins and net profit margins a decade ago and now, the margins are maintained and in fact net profit margin has become better. I took a deeper look at the trend for these two profit margins and indeed the margins have maintained well over the past decade with no sudden drops in between. This shows us that Thai Beverage does boasts of a stable and resilient profitability in it's overall businesses over time.


Next on to their efficiency. Thai Beverage's return on assets (ROA) and return on equity (ROE) have maintained well one decade ago and in recent 2017. In fact, I looked at their one decade trend in these two returns metrics and they have maintained well at current levels of ROA (above 10%) and ROE (above 15%). We must realise that it is not easy to maintain the ROA and ROE in any business while it is growing it's assets and shareholders' equity through time. To be able to maintain the same level or even increase the level of ROA and ROE would mean the business has high efficiency. Thai Beverage just demonstrated their high efficiency in their businesses. If they can continue to maintain these same levels of returns, I will be even much more impressed with them.
Now on to their liquidity. We see that Thai Beverage just got much better at their cash conversion cycle. The number of days in their cash conversion cycle has decreased significantly over the past decade meaning that it takes them much lesser time in number of days to convert cash on hand into even more cash through their operations. Also, their operating cash flows and free cash flows have grown over the past decade generating more cash flows albeit their free cash flows have grown at a lower compounded growth rate. Their free cash flows over the past decade have been on average about four times their capital expenditures in any single year. They are definitely generating hell lots of free cash flows from their businesses with such relatively low capital expenditures requirement. It is no wonder with their strong liquidity and cash flows that they have the means to maintain a high dividend payout ratio of at least 50% of their net profits..

Next on to their financial leverage. Thai Beverage's debt to equity ratio has maintained at 0.45 to 0.47 level over one decade period. However, lately, there were concerns of chalking up too much debts to make four recent acquisitions (see link below). The debt to equity ratio of Thai Beverage from their most recent 1Q results ended 31 Dec is now around 1.76. Good gracious! They have just leveraged themselves higher at slightly more than 3 times their historical average leverage level. The big question now on every shareholder's mind should be whether they have just chewed more than they can swallow? Will they choke on so high a leverage or are we simply getting too overly worried?
I did an estimation of how long their free cash flows at current level (assuming their free cash flows do not increase anymore) will pay back all their debts. It will take them approximately 9.6 years to pay back all their existing debts (both short term and long term debts) by their existing free cash flows. I think Thai Beverage will likely roll over some of the debts by refinancing while repaying some debts along the way to reduce their current high leverage. If we examine their current assets versus current liabilities, current assets stand at about 79 billion Baht while current liabilities stand at about 90 billion Baht. Thus, with another 24 billion Baht from their existing free cash flows, immediate working capital needs should be adequate for them. We must not forget also that the new acquisitions will also contribute to their cash flows and create another additional buffer for their liquidity needs.
All in, I think we should not fret out on their high leverage at the moment but continue to monitor their progress at this stage of their expansion to give them time to work things out to reduce their leverage gradually which they have the strong cash flows generation and enough resources to manage this high leverage.
Valuation wise is tricky at the moment with these new acquisitions and high leverage now taken to work out how the future growth in EPS will be like. Perhaps a few more quarters will paint a better picture on how the new acquisitions will impact their earnings and cash flows for working out any fair valuation for them. At the moment, I will just observe this beverage giant going forward for new developments on their earnings and cash flows.
Article from Bangkok Post: ThaiBev riding Asean acquisition wave 

As per mentioned in my comment, I have no fair value for Thai Bev until I can see how their earnings and cash flows for next few quarters change after these recent acquisitions.
However, just for interest sake, I did an estimation of their enterprise value per share using figures from SGX Stock Facts (assuming the figures presented there are accurate). It works out to be $1.79 per share. Enterprise value (EV) is often thought of as a more robust measurement than market capitalisation of the true value of a company in the event of a take over of the company.
Thus, if we look at the current share price, it is definitely trading below the EV per share. As I have mentioned, EV though being a more robust measurement of the true value of an enterprise will only be potentially realised upon a take over of the enterprise. I will thus refrain from commenting whether the share price is really cheap now based on an ongoing business basis and not being viewed as a near term potential take over target. I will wait a while more to see how things work out for them (in view of recent changes to their leverage and substantial acquisitions made) based on this full year's results before being able to work out a fair value per share on an ongoing business growth in earnings basis.
Jeep wise, maybe not so soon for me until I can work out a fair value for them. But, I have a hunch with the current drop in their share price, it does present a very tempting bargain proposition for many investors.

Yup TII, I think they must already know how much leverage they could have managed on their risk scenario and ROI analysis for them to be so confident to take on these 4 acquisitions within a short time. Afterall, they have been on a track record of many acquisitions done before and never had liquidity issues before. But having said that, history may not be 100% a guarantee of future. I think it is better to observe their performance for a while going forward how they manage their current leverage and how the acquisitions contribute to their overall profitability, cash flows and ROI before commenting on whether they might have chewed off too much than they can swallow. As of now, I am cautiously positive based on their existing profitability, cash flows and cash level that they might not have reached a stress breaking point yet with these acquisitions. We shall see going forward.

Yup! The lower price to jeep, the better! No hurry yet until things pan out clearer for them. If already vested, no worry too as I think they are strong enough to manage this current leverage .
Cash flows are key going forward for Thai Bev. I think the huge amount of goodwill and the interest payment for the loans may drag down the reported earnings. How much will depend on how strong are the cash flows from the new and existing businesses.
Being such a large corporation, their finance team must have run through extensively on the risk scenario and ROI analysis, for them to be so confidence to buy these 4 acquisitions within a short time span. All The Best!


dyodd.


Monday, April 23, 2018

Sunningdale Tech

2nd May :

Dollar turns positive for 2018 before Fed meeting




Nasdaq closes higher as Apple jumps ahead of earnings

  • The tech-heavy index closed 0.9 percent higher at 7,130.70 while Apple climbed 2.3 percent.
  • Apple, the largest publicly traded company in the U.S., is scheduled to report fiscal second quarter earnings and revenue Tuesday after the close.



Sunningdale Tech first quarter 2018 Net Profit plunges 75% to $1.9m. EPs Of 1.3 cents.


During 1Q2018, the Group suffered foreign exchange losses of S$5.2 million as compared to foreign exchange losses of S$2.1 million for 1Q2017. This was primarily attributed to the depreciation of the US Dollar against the respective functional currencies of the Group’s entities. Excluding the impact of foreign exchange losses, one-off disposal gains and retrenchment costs, the Group’s core net profit declined 25.5% yoy to S$7.1 million.


Despite the slowdown in the Consumer/IT segment during the quarter, there are plans to progressively ramp up production for new projects within this segment that will carry through to the second half of 2018.

Looks like 2nd half may see much better result 
Not a call to buy or sell.
Please do your own due diligence.



 Despite continued improvements to operational efficiency, the Group’s gross profit declined 17.2% yoy to S$21.4 million while gross margin declined to 12.7%. This decline was due primarily to lower utilisation levels as a result of lower orders in the Consumer/IT segment.

Furthermore, if exchange rates had remained the same as 1Q2017, the Group would have reported an additional S$2.8 million gross profit while gross margin would have been at 14.0%.

(S$'000) 1Q2018 1Q2017  Change Profit for the period 1,940 7,698 (74.8)% Adjustments:    Foreign exchange loss 5,205 2,123 n.m. Retrenchment costs - 113 n.m. Gain on disposal of PP&E (36) (387) n.m. Core net profit 7,109 9,547 (25.5)%




  Despite continued improvements to operational efficiency, the Group’s gross profit declined 17.2% yoy to S$21.4 million while gross margin declined to 12.7%. This decline was due primarily to lower utilisation levels as a result of lower orders in the Consumer/IT segment. Furthermore, if exchange rates had remained the same as 1Q2017, the Group would have reported an additional S$2.8 million gross profit while gross margin would have been at 14.0%.  (S$'000) 1Q2018 1Q2017  Change Profit for the period 1,940 7,698 (74.8)% Adjustments:    Foreign exchange loss 5,205 2,123 n.m. Retrenchment costs - 113 n.m. Gain on disposal of PP&E (36) (387) n.m. Core net profit 7,109 9,547 (25.5)%  During 1Q2018, the Group suffered foreign exchange losses of S$5.2 million as compared to foreign exchange losses of S$2.1 million for 1Q2017. This was primarily attributed to the depreciation of the US Dollar against the respective functional currencies of the Group’s entities. Excluding the impact of foreign exchange losses, one-off disposal gains and retrenchment costs, the Group’s core net profit declined 25.5% yoy to S$7.1 million.  The Group continued to generate strong positive operating cash flows of S$6.9 million for 1Q2018. This contributed to balance sheet strength with cash and cash equivalents amounting to S$105.4 million.   The Group continued to generate strong positive operating cash flows of S$6.9 million for 1Q2018. This contributed to balance sheet strength with cash and cash equivalents amounting to S$105.4 million.

 Looking ahead, the Group continues to reinvest in technology and new machinery in order to stay ahead of the curve in a dynamic business environment where change is the only constant. To that end, CAPEX rose to S$13.2 million for 1Q2018.


This is supported by the latest opening of the Group’s 20th manufacturing facility located at Penang, Malaysia.



Being strategically located in close proximity to the Group’s customers, capacity would be added progressively to support new contract wins. Over-time, this latest facility is also expected to serve customers in the Group’s other two business segments –Automotive and Healthcare.

In conclusion, Mr Khoo added, “Our order book is stable as existing organic growth initiatives have led to queries from new and existing customers who are confident in our ability to handle challenging projects on a global scale.

 Heading into the remainder of the year, we are vigilant of the headwinds such as foreign exchange volatility and rising labour costs.

 Our focus on boosting the productivity and operational efficiency of our core operations continues to garner momentum. While the business environment and macroeconomic uncertainty present challenges to our operations, we remain confident in the Group’s long-term sustainability and profitability

Quote: Jeremyowtaip
I saw an article written by The Edge Singapore and also went through their 1Q financial results announcement.
From both the article by The Edge Singapore and also from Sunningdale's 1Q results, I noticed three things affecting Sunnningdale's 1Q 18 results y-o-y as compared to 1Q 17.
1. Adverse foreign exchange losses due to weakening of USD versus other currencies such as RMB, RM and SGD affecting both revenue and net profit. I noticed that the amount of forex losses registered can be quite substantial to cause a significant decrease in net profit.
2. Increase in competition and labour cost has caused a decrease in net profit y-o-y. I noticed their administrative expenses has increased y-o-y reflecting this increase in labour cost.
3. Advancing of orders for consumer/IT segment in 1Q17 and comparatively lesser work orders received and completed in 1Q 18. Thus, the revenue for consumer/IT segment has decreased y-o-y and dragged down overall revenue.
However, from their commentary on the outlook for the second half of the year, they are optimistic there will be a ramp up of orders for their newly built Penang manufacturing plant which has started some pilot runs for mass production for consumer/IT segment. Despite this, the company expects their performance for the rest of the year to be affected by volatile forex movements, keen competition and increase in labour cost. The company is still overall optimistic that their business model is resilient and sustainable and should be able to weather this current challenging operating environment.


My take is to continue to monitor their progress for the rest of the year which hopefully as what the management has mentioned, second half of the year should be better. However, if one notice that there are any significant deterioration in it's businesses such as winning even lesser orders going forward from new and existing customers, then one has to investigate whether the company is starting to lose it's competitive edge versus it's competition especially in the consumer/IT segment which is the one which is currently impacted. For now, just monitor their progress going forward.

Saturday, April 21, 2018

ParkwayLife Reit

ParkwayLife Reit - It owns the largest portfolio of strategically-located private hospitals in Singapore comprising Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. 

In addition, it has 45 assets located in Japan, including one pharmaceutical product distributing and manufacturing facility in Chiba Prefecture as well as 44 high quality nursing home and care facility properties in various prefectures of Japan. 

It also owns strata-titled units/lots at Gleneagles Intan Medical Centre Kuala Lumpur in Malaysia.


Looking through their financial nos from 2013 to 2017, we can notice that its Total Revenue is generally rising at a CAGR of 4.3% from 93693m in 2013 to 109,881m in 2017. This is quite consistently increasing for the past 4 years which is quite encouraging/positive.

Total Revenue - is the sum of cash inflows, increase in operating accounts such as receivables and occasionally, unrealized gains generated in the course of Company's Business activities.

Next, we can take a look at the Total Net Income level which has only generated an returns of only 0.81% (CAGR) from 98.279m in 2013 to 101.464m in 2017. The Net Income seems like not growing much. Investor may want to take note of this. 


The DPU has since a marginally increase from 0.107 in 2013 to 0.134 in 2017. An increase of 0.06% CAGR. The average yield for the past 4 years is about 0.122. Giving a yield of 4.38%.
This is generally below the 5to5.5 % yield expectation for investing in Reit counter.

NAV of $1.761, P/B is 1.61 times.

The Gearing % is about 40% which can be roughly calculated base on the Total Liabilites 705,881/ 1771,221 Total Assets . It is still within the guide line being set by MAS.. Generally, we would prefer gearing to be around 30-36%.


Ops cash flows seems quite pretty stable generating a Net cash from Ops is within 76 to 80m.


The current price of $2.78 is trading above it NAV of $1.761 and it is also trading above its fair value of about $2.00( using DDM to work out the fair value ) . I think it is trading at a premium price level and investor may want to take note of this.

Looking through the Historical chart patterns, we can use it as a reference .



Strong support level is around $2.20 level. The next support level would be $1.80.



Not a call to buy or sell.
Please do you own due diligence.

trade/invest base on your own decision. 



 Parkway Life Real Estate Investment Trust (“PLife REIT”) is one of Asia’s largest listed healthcare REITs by asset size. It invests in income-producing real estate and real estate related assets that are used primarily for healthcare and healthcare-related purposes (including but are not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices). PLife REIT owns a well-diversified portfolio of 50 properties with a total portfolio size of approximately S$1.75 billion as at 31 December 2017.