Sino Grandness

NAV is about RMB$3.20 which is about S$0.66.
EPS is about RMB 4.4 cents. Which is about S$0.09 .

Let say full year EPS is about S$0.04 cents , PE is about 6.25x base on current price of 25 cents.

SINGAPORE – 15th May 2018 – Mainboard-listed Sino Grandness Food Industry Group Limited 中华食品工业集团有限公司 (“Sino Grandness” or “the Company” and together with its subsidiaries, the “Group”), a Shenzhen, China based integrated producer and distributor of own-branded juices and canned fruits and vegetables today reported its unaudited results for the first three months ended 31 March 2018 (“1Q18”)

 In 1Q18, net profit attributable to shareholders for the Group decreased 18.3% to RMB 43.1 million compared with RMB 52.8 million in the same period last year (“1Q17”). The decrease in net profit was mainly due to higher distribution and selling expenses and lower gross profit margin in 1Q18 when compared to 1Q17.

Earnings per share (“EPS”) in 1Q18 decreased to SGD 0.9 cents from SGD 1.6 cents in 1Q17 while net asset value (“NAV”) per share increased to SGD 67.5 cents as at 31 March 2018 from SGD 66.5 cents as at 31 December 2017. (EPS calculations in 1Q18 and 1Q17 based on weighted average number of ordinary shares of 979,410,000 and 691,801,000 respectively. NAV calculations based on 979,410,658 shares. Exchange rate used SGD1=RMB4.74)

 Chairman and CEO of Sino Grandness said, “I am pleased to see that demand for our own-branded products have remained strong in 1Q18, especially our beverage segment which reported double-digit growth in sales. In order to extend and diversify our product range, we have continued to invest resources to develop and launch new beverage products such as mango juice, coconut milk, apple vinegar and lactobacillus drinks. These efforts have yielded positive results as we now derive sales from a wider range of beverage products in addition to loquat juices.”

  “Our net profit in 1Q18 was impacted by lower gross profit margin and higher advertising and promotion expenses as we need to continuously invest in growing our distribution channels, brand value and brand visibility. However, we exited the quarter with a stronger balance sheet with cash and cash equivalents rising to RMB 924.0 million as at 31 March 2018 from RMB 693.6 million as at 31 December 2017 due to positive net cash generated from operating activities in 1Q18.”

The Group’s gross profit in 1Q18 increased by 6.6% to RMB 265.0 million from RMB 248.5 million in 1Q17 as a result of higher sales in 1Q18. Gross profit margin (“GPM”) for the Group in 1Q18 decreased by 2.7 percentage points to 36.4% from 39.1% in 1Q17 due to a decrease in GPM of beverage and overseas canned products segments, partially offset by an increase in GPM of domestic canned products segment. The decrease in GPM of beverage segment in 1Q18 was mainly attributable to the change in product mix and lower average selling prices for a limited range of products as a result of our price adjustment exercise to maintain market competitiveness. The increase in GPM of domestic canned products segment was mainly due to lower cost of raw materials in 1Q18 when compared to 1Q17.

Outlook

 To capitalize on the growth opportunities ahead, the Group will continue to invest in various advertising and promotional activities as well as sales and marketing initiatives in order to enhance its brand visibility and expand its online and offline distribution network.


In March 2018, the Company entered into a strategic agreement with Baixianwang Intelligent Technology (“深圳市百鲜网智能科技有限公司”) and Tomcat Culture (“深圳市 童猫文化产业有限公司”) to distribute the Company’s full range of own-branded products, including 鲜绿园 (“Garden Fresh”) beverage product, 振鹏达 (“Grandness”) canned food and 福食特 (“First”) snack food through a distribution network using intelligent technology. This include unmanned convenience stores which offers convenience and are highly visible and accessible to consumers. Barring unforeseen circumstances, the Group remains optimistic about its operating performance in FY2018.

TA wise, looks bullish!
It is on a nice reversal play after touching the low of 19 cents in 3rd April 2018.
The current price of 25 cents is staying above its SMA line which is rather positive and may likely see it re-attempt the recent high of 25.5 cents.

Breaking out of 25.5 cents with east + good volume that may drive the price higher towards 28 then 30.5 cents.

Not a call to buy or sell.

Please do your own due diligence.

DBS

Looks like local bank counter may rally due to Dow overnight gaining +300 points and managed to recapture 25000 level. This is rather bullish!

Looks like Bull might be taking control and DBS may likely see it rises from $28.80 to retest the immediate resistance at $29.50 level. Breaking out of $29.50 level with good volume that may reverse this downtrend and moving up the channel.

 The next target would be likely testing $30.00 again !

 Not a call to buy or sell.

 Please do your own due diligence.

Stocks rose on Wednesday as bank shares rallied on higher interest rates, while Boeing rose. The Dow Jones industrial average closed 346.41 points higher at 25,146.39 with Boeing rising 3.2 percent and contributing the most to the gains. J.P Morgan and Goldman Sachs were also among the biggest contributors of gains. The Dow also closed above 25,000 for the first time since mid-March.

 The S&P 500 gained 0.9 percent to finish at 2,772.35 as financials rose 1.9 percent. The benchmark 10-year Treasury note yield rose to 2.98 percent on Wednesday, following yields in Europe after the European Central Bank hinted at winding down its asset-purchasing program.

 Shares of J.P. Morgan Chase, Bank of America and Morgan Stanley all rose more than 2 percent, while Goldman Sachs advanced 1.7 percent. The SPDR S&P Bank exchange-traded fund (KBE) gained 2.1 percent, marking its best day since March 26 (cnbc.com)

DBS Group Holdings Ltd, an investment holding company, provides commercial banking and financial services in Singapore, Hong Kong, rest of Greater China, South and Southeast Asia, and internationally. It operates through Consumer Banking/Wealth Management, Institutional Banking, Treasury Markets, and Others segments. The Consumer Banking/Wealth Management segment offers banking and related financial services, including current and savings accounts, fixed deposits, loans and home finance, cards, payments, investment, and insurance products for individual customers. The Institutional Banking segment provides financial services and products for bank and non-bank financial institutions, government-linked companies, large corporates, and small and medium sized businesses. Its products and services comprise short-term working capital financing and specialized lending; cash management, trade finance, and securities and fiduciary services; treasury and markets products; and corporate finance and advisory banking, as well as capital markets solutions. The Treasury Markets segment is involved in structuring, market-making, and trading in a range of treasury products. The Others segment offers stock broking and Islamic banking services. The company operates approximately 280 branches across 18 markets. DBS Group Holdings Ltd was founded in 1968 and is headquartered in Singapore.

Raffles Medical

From TA wise, it is on a down trend mode. The current price of 1.06 is hovering near the support at 1.04.

Looks like it has driven into oversold territories! It may likely see a rebound happening soon and take it higher towards 1.10 then 1.18 level .

I think current price level may attract some bargain hunter interest.

Trade / invest base on your own decision.

 The potential catalysts are the two new China hospitals which will contribute to it's earnings growth going forward. Even if the initial execution meets with hiccups, I think they will be able to work things out for the longer term as I am confident they have already done their extensive due diligence and ground studies before embarking on the new hospitals. And it is not just one but two new hospitals set up in two separate cities in China. To be able to trigger such a huge expansion project, they must have worked out that on a long term basis, the market there in China have tailwinds favouring demand for private medical healthcare. And Chongqing and Shanghai are two of the largest cities in China which are strategically located with high population and considered few of the important economic centres of China apart from Beijing.

Total Revenue has been consistently increasing from $340.99m in 2013 to $477.58m in 2017.

The Total Revenue is growing at a CAGR of 8.1%. A single digits high ,of which I think is quite good already.

 Operation cash flow has been quite healthy as they are able to generate $71.19m in 2013 to $82 .69m in 2017.

 Net income Margin has been generally declining from 24.89% to 14.82% in 2017.

It might be due to higher material /operation costs. NAV of 40.01 cents. EPS of 4 cents. PE of 27.64 times

 Dividend has been generally increasing from 1.7 cents in 2013 to 2.2 cents in 2017. This is really a welcome news for shareholder .

 For RMG, I have two possible fair values depending on how well it can execute it's new expansion and growth of it's Bugis hospital extension and also it's two China hospitals to grow it's EPS.

For the conservative fair value, it is $1.14 assuming a CAGR of 10% on it's EPS for next 7 years.

 For the more aggressive fair value, it is $1.46 assuming a CAGR of 14% on it's EPS for next 7 years. Thus, any price $1.14 and below is a bargain opportunity to me.

not a call to buy or sell. Please dyodd.

Raffles Medical Group Ltd engages in the medical clinics operation and other general medical service businesses primarily in Singapore. The company operates through three segments: Healthcare Services, Hospital Services, and Investment Holdings. Its flagship hospital is Raffles Hospital, a tertiary care hospital that offers services, including emergency, cancer, children and women care, traditional Chinese medicine, counselling, dental, diabetes and endocrinology, dialysis, ear nose and throat, eye, family medicine, fertility, health screening, heart, internal medicine, international patients services, neuroscience, pain management, rehabilitation, radiology, Japanese clinic, orthopaedic, skin and aesthetics, surgery, urology, and nuclear medicine services for inpatients and outpatients. The company also operates 100 medical clinics that provide various services, such as general practice/family medicine, emergency, health check, health screening, immunization, travel health, specialty, minor surgery, X-ray, pre-marital screening, and corporate programs; provides health and related insurance; trades in pharmaceutical and nutraceutical products, and diagnostic equipment; and provides healthcare management and consultancy services, as well as specialized medical, medical laboratory, imaging center, dental, and clinical services. In addition, it owns properties; develops IT solutions; provides advisory and medical emergency assistance services; and sells medical kits. The company was founded in 1976 and is based in Singapore.

Genting Singapore

From TA point of view, the current price of $1.28 has managed to reclaimed it's 20 days moving average which is being viewed as quite positive/bullish!

1.28 is also staying well above it's 50,100 & 200 days moving average that may likely see it's price continue to head higher.

Short term wise, it may move up to test the recent high of 1.33,breaking out of 1.33 with ease + good volume that may propel to drive the price higher towards 1.40 then 1.45 with extension to 1.50.

Not a call to buy or sell.

Please do your own due diligence.

Genting Sing - these are my thoughts and findings on Genting Singapore.  Genting Singapore derive it's revenue mainly from the operation of Resorts World Sentosa, a large integrated lesiure and hospitality resort located on Sentosa island of Singapore. It features six uniquely themed hotels, a casino, one of the world's largest aquarium S.E.A. Aquarium, Southeast Asia’s only aquatic park integrated with marine life - Adventure Cove Waterpark, Southeast Asia’s first and only Universal Studios theme park – Universal Studios Singapore, Singapore’s largest destination spa – ESPA, a wide selection of indoor and outdoor MICE venues, and a variety of dining, retail and entertainment options. Genting Singapore has went through a series of capital raising through debts and equity to fund the building of Resorts World Sentosa. This was a very large project undertaken by Genting Singapore years back which ran into billions of Singapore dollars in order to achieve what we see now as the completed Resorts World Sentosa. It is with this backdrop that I will discuss the performance of Genting Singapore after having spent so much capital into this huge project. Resorts World Sentosa had it's grand opening in 2012. Thus, it has been officially opened for the past about 6 years. I shall look at Genting Singapore's performance from 2012 to 2017 over the span of 5 years after the grand opening of Resorts World Sentosa, where it's derives almost all it's revenues from this huge project.quote :

( jeremyowtaip)  First, we look at the compounded annual growth rate (CAGR) in revenues for Genting Sing. Over the past 5 years, it's revenues have not grown but instead decreased by about 18.8%. I was surprised why it's revenues did not grow but instead decreased. I took a look at the breakdown of it's revenues of which the majority of revenues came from it's gaming revenue (casino operations) while the other second major revenue stream came from it's non-gaming revenue (other non-casino operations). It's gaming revenue is around close to three times it's non-gaming revenue. We can see that the total revenue of Genting Sing really depends on their revenue derived from casino operations. Over the past 5 years, the gaming revenue has decreased while non-gaming revenue has increased to offset some of the decrease in gaming revenue. But due to the majority of revenue are derived from gaming revenue, the total revenue thus decreased over the past 5 years. We see that the revenue of the casino has decreased over the past 5 years. It is worth investigating further why was there a fall in revenue of casino operations over the past 5 years? Next, we look at the CAGR in operating profits. Operating profits have grown at a CAGR of 0.83% over the past 5 years. Despite a fall in revenues over the past 5 years, Genting Sing has still managed to grow it's operating profits at a meager rate. I see that they have managed to reduce their administrative expenses and also selling and distribution expenses over the past 5 years despite a fall in revenues to protect their operating profits from suffering a similar drop. However, a CAGR of 0.83% is still like not much growth at all! There are so many much better investment ideas out there which definitely produces much higher CAGR in their operating profits even over a short period of 5 years! Next, we look at the CAGR of net profit attributable to shareholders of company. This has grown at a CAGR of 0.46% over the past 5 years. This again confirms that the growth in profitability over the past 5 years was not great. Next, we look at the CAGR of diluted earnings per share (EPS) attributable to shareholders of company over the past 5 years. The diluted EPS has grown at CAGR of 0.76% over the past 5 years. Again, this is another confirmation that the growth in profitability over the past 5 years was not great. I looked at the individual years from 2012 to 2017 to see how the individual year's profitability has changed. The profitability has decreased and then increased again in 2017. The drop in profitability reflected in it's operating profit and net profit attributable to shareholders of company can be quite significant for example in 2015. Therefore, I reach a conclusion that for a shareholder of this company, one has to be prepared to face wild swings in the profitability of this company as the swings can be quite significant in any year. Of course, if an investor can time his entry to buy the shares at lower prices when the profitability has dropped to a low point in preparation for any potential significant recovery in profitability in subsequent year, this investment could be a good candidate to speculate on it's swing in profitabilities. As such, due to the low growth in profitability over the past 5 years, the various returns on assets, returns on equity and returns on invested capital were consistently at low single digits suggesting Genting Sing is a low return investment.

Next, we look at how some of their balance sheet metrics have changed over the past 5 years. I tabulated the various metrics as follows for 2012 vs 2017: Current ratio = 4.29 (2012) vs 4.78 (2017) Quick ratio = 3.59 (2012) vs 4.58 (2017) Debt to equity ratio = 0.3 (2012) vs 0.16 (2017) Ordinary shareholder equity CAGR over 5 years = 2.34% Genting Sing's balance sheet has been very strong over the past 5 years. It did a series of capital raising through borrowings and equity over the past decade to fund the building of Resorts World Sentosa. However, the various balance sheet metrics reflected that Genting Sing did not have any problems with over-leveraging or liquidity issues over the past 5 years. Genting Sing grew ordinary shareholder equity at CAGR of 2.34% over the past 5 years thus making their shareholders wealthier in their investment in Genting Sing.

However, at a CAGR of 2.34%, it pales in comparison with many other companies out there which can grow their ordinary shareholder equity at much higher growth rates making their shareholders wealthier even faster. Next, we look at the growth in cashflows. Genting Sing grew their operating cashflows at a CAGR of 3.92% over the past 5 years. It grew it's free cashflows at a CAGR of 25.4%.

 I noticed that their capital expenditures have reduced significantly over the past 5 years in which the capital expenditures to purchase property and equipment has reduced sharply. Perhaps they have already completed most of their massive capital expenditures when they built the Resorts World Sentosa and for the first few years after it's grand opening in 2012, the ongoing capital expenditures requirement has continued to drop to a lower level. This reduction in capital expenditures have certainly helped to grow their free cashflows at high CAGR of double digits over the past 5 years.

Thus, Genting Sing is now reaping a good harvest from what it has previously sowed by getting free cashflows at a high CAGR on this huge investment in Resorts World Sentosa. As for current developments, Genting Sing has raised a Samurai bond of approximately $175 million to bid for casino license in Japan. It is still awaiting further legislation approval to allow the opening of casinos in Japan. Among the bidders are strong names like US's Las Vegas Sands and Macau's Galaxy Entertainment Group which have also expressed interest in vying for an entry into Japan market. I have attached a link to an article from Nikkei Asian Review which has details on the above development. Valuation wise, if we assume that Genting Sing will continue to grow their EPS at historical CAGR of 0.76% for next 7 years, using my method of estimation, the fair share price for it is $0.50.

 The market is trading Genting Sing at $1.28 which is assuming a higher CAGR of 7% to it's EPS. Can Genting Sing improve it's profitability significantly going forward at higher CAGR? If it can, then current share price is not over-valued. ( the tecent 1Q 2018 seems to see Net profit rises quite significantly) also did a discounted cashflows analysis using a discount rate of 15% and the estimated intrinsic value per share comes out to $1.95.

This is just an estimate and the intrinsic value per share could change significantly depending on the discount rate used. My conclusion is that if we focus on the forward profitability of Genting Sing, then it's share price could be over-valued now. However, if we focus on the forward growth in it's free cashflows, then Genting Sing is under-valued now. If we take both forward growth in profitability and free cashflows together with an average fair share price worked out from $0.50 and $1.95, it comes out to $1.225. Out of curiousity, I checked out SGX Stocks Facts to see what it reflected there for Genting Sing's current valuation based on an equal weighted combination of various ratios used in assessing Genting Sing's valuation score versus it's peers.

The ratios used include P/E, P/B, P/FCF, dividend yield, EV/EBITDA and EV/sales. Based on an equal weighted combination of these various ratios, Genting Sing is currently estimated to be slightly over-valued as compared to it's peers. I think my main consideration in choosing a great investment idea is that it must not have any flaws or the only one or two flaws it have can be easily overcome in a short period of time.

For Genting Sing, I see it's volatile profitability as a potential inherent weakness that is difficult to grasp even though it's reduction in capital expenditures and growth in free cashflows so far looks good. If there is another better investment idea which combines all growth in profitability, growth in free cashflows and strong balance sheet all looking good and the growths are visible into the next few years without the investor needing to guess on it, shouldn't he consider the investment idea that present all stars align together?

One plus factor is the dividend has been generally increasing from the initial 1 cents to 3.5 cents. An increase of 2.5 x .
Different individual may have different way of calculating the intrinsic value. I may roughly estimate the intrinsic value ( cashflows) as $1.95 x 0.8 = $1.56. The upside potential of 21.9% base on current price of $1.28

Thus, if I were to consider Genting Sing, it will only be a speculative value play when very visible value emerges rather than a long term investment.

Trade/invest base on your own decision.

Hi-P

From TA point of view, it has now managed to reclaimed its 20 day moving average which is quite positive and may likely continue to trend higher.

Good thing is that it has managed to bounce-off from its recent low of 1.27 on 23 May 2018 and rises higher to touch 1.42 on 30 May 2018, this is rather bullish.

Yesterday closing price of 1.42 is rather healthy as it has managed to retest the recent high and may likely continue to move up towards 1.52 then 1.57 . Filling up the Gap at about 1.63 would be rather bullish and may likely drive the price higher towards 1.78 which is also coincide with its 50 days moving average.

Not a call to buy or sell.

Please do your own due diligence.

NAV of 65.4 cents.
Rolling EPS of 15 cents.
PE of less than 10X
Dividend of about 10 cents.
Yield is 7% which is rather impressive.

Yesterday Nasdaq notches a record close as shares of Apple and Amazon jump to new highs 

• Monday marked the first record closing high for the Nasdaq dating back to March 12, when it closed at 7,588.32.
• The tech-heavy index rose 0.7 percent as Apple and Amazon gained 0.8 percent and 1.5 percent, respectively.(cnbc.com)

This may likely bring cheers to local Tech counter like Hi-P and hopefully see its price rises to retest 1.52 and above.

Latest 1Q result for your reference. Gross Profit increased 13% to reach 37.8m. 
Net Profit increase marginally of 1.3% to 12.1m after factoring the foreign exchange loss of 13m..

Hi-P International Limited operates as an integrated contract manufacturer serving the telecommunications, consumer electronics, computing and peripherals, lifestyle, and medical and industrial devices industries. The company operates through three segments: Precision Plastic Injection Molding; Mold Design and Fabrication; and Provision of Sub-Product Assembly and Full-Product Assembly Services. It manufactures and sells molds and special tools, related housing appliance plastic components and equipment, and water treatment equipment; plastic components and plastic product modules; mold base and components; electric components and electronic communication equipment; in-mold decoration lenses; precision stamped metal components and precision tools; and metal and non-metal stampings, as well as provides spray painting, engineering support, maintenance, and technology consultation services. In addition, the company engages in the manufacture, wholesale, import and export, and sale of electronic telecommunication devices, housing appliances, automated equipment, and related components. Further, it manufactures and sells trays, mobile phones, telecommunication products, digital cameras and related electronic products, and electric toothbrushes; assembles coffee machines and parts, as well as provides related maintenance and after-sales services; and offers investment and management consulting services. Additionally, the company engages in the assembly and provision of ancillary value-added services, primarily surface finishing services. It has operations primarily in the People's Republic of China, Singapore, Malaysia, Thailand, Europe, the United States, the rest of Americas, and internationally. The company was founded in 1980 and is headquartered in Singapore.

Sunningdale Tech

After touching the low of $1.25 on 17th May 2018, it has managed to bounce-off and rises higher to hit 1.46 on 28th May 2018, this is rather bullish!

The current price of 1.39 is now taking a breather and may likely move up to retest the recent high of 1.46 again. At 1.39 is hovering above its 20 days moving average which is rather positive and may likely continue to drive the price higher to retest  1.46 then 1.55 with extension to 1.61.

Not a call to buy or sell.

NAV 1.98.
dividend of 7.5 cents.
Yield of 4.6%
PE of 10x

Please do your own due diligence.

Sunningdale Tech - I have looked through Sunningdale Tech and here are my thoughts on this tech company.

Sunningdale Tech is a leading Asian tooling, plastic injection moulding and precision assembly company. They are currently operating in four main business segments namely automotive, consumer/IT/environment, healthcare and tooling/mould fabrication. They currently have 19 manufacturing facilities spread across 9 countries and as their chairman mentioned, they continue to receive queries from both new and existing customers who recognise their ability to undertake projects on a global scale. So far so good, the background business profile seems to suggest they are a global player in their field.

The chairman in the FY16 annual report did raised a few challenges their businesses constantly face such as foreign exchange movements, rising labour cost, pricing pressure from customers, rising input costs, and structural reforms in China (which affects their China based businesses).

With these backdrop, let us look into their business performance so far over the past decade. First, we look into how their revenues have grown over the past decade. Revenues have grown by a compounded annual growth rate (CAGR) of 6.52% over past decade.

Next, their operating profit has grown by a CAGR of 9.2% over the past decade.

Next, their profit attributable to shareholders has grown by a CAGR of 9.98% over the past decade.

Next, their diluted earnings per share (EPS) has grown by an impressive CAGR of 25.9% over the past decade.

This is a low profit margin company. Let's look at how the profit margins have changed a decade ago compared to now.

Operating profit margin = 4.6% (2007) vs 5.9% (2017)
Profit attributable to shareholders margin = 3.1% (2007) vs 4.3% (2017)

The various profit margins have improved over the past decade though they are generally still at low single digits. The operating profit, profit attributable to shareholders and diluted EPS have all grown faster than revenues. It seems that Sunningdale Tech have managed to keep the various operating expenses well controlled to achieve better operating efficiency. Indeed, the % of operating expenses (excluding finance cost) over revenues have decreased from 12.4% to 9.6% over the past decade. In 2017, operating expenses (excluding finance cost) only made up 9.6% of their revenue. They have been definitely doing well to reduce operating expenses while improving profit margins amidst a challenging business environment they operate in with pricing pressure from customers and rising input cost and labour cost over the past decade.

Now let's look some of the various metrics from their balance sheet and see how have they changed over the past decade.

Current ratio = 1.21 (2007) vs 1.74 (2017)
Quick ratio = 0.39 (2007) vs 0.39 (2017)
Debt to equity ratio = 0.29 (2007) vs 0.28 (2017)
Shareholder equity CAGR = 1.12%

This was a net net company (current assets > total liabilities) a decade ago and a decade later, it still maintains it's net net company status. The company has maintained similar leverage level taken a decade ago and now. It's balance sheet is strong as it has maintained it's net net status over the past decade. However, Sunningdale Tech did not grow it's shareholder equity at high CAGR thus not making their shareholders wealthier at a fast rate.

The returns on assets, returns on equity and returns on invested capital a decade ago were at low single digits of 2.36%, 3.75% and 3.62% respectively. However, the various returns have improved over the past decade and now returns on assets, returns on equity and returns on invested capital stand at 6.98%, 13.28% and 10.75% respectively. Clearly, the management has become more efficient over the past decade in producing better returns.

 The question now is can the management continue to improve their various returns any further or are these the best they can achieve? This is because the various returns though have improved over the past decade, have also remained stagnant around current levels for the past 3 years.

Next, we look at how their cashflows have grown. Operating cashflows have not grown much at all and remained at about similar levels now as compared to a decade ago. Free cashflows have decreased in their reported FY17 financial results as compared to a decade ago. I noticed the trend of their operating cashflows and free cashflows over the past decade can be quite volatile with some years having more operating cashflows and free cashflows while other years having lesser.

Nevertheless, their free cashflows are still able to meet their dividends paid. One may need to watch their future cashflows carefully to make sure their cashflows can continue to grow even while over any single year, it may show volatile swings. If future cashflows do not grow anymore and even show a decreasing trend, then it could be a potential red flag to watch out for.

Nevertheless, Sunningdale Tech has strong balance sheet. But, we will also like to see that it can continue to receive increasing operating and free cashflows from it's businesses as it continues it's growth. Or else, the current assets carried on their balance sheet though looking impressive giving them a net net status and especially made up of a good amount of trade and other receivables, may start to make one worry whether there are any difficulties with collecting cash from these receivables.

Overall, I find Sunningdale Tech still an alright investment for consideration. But based on some of the above potential weak spots such as the weakness of it's cashflows being raised and operating in a constantly challenging environment, I will put it as an alright but not fantastic investment idea.

Valuation wise, if we assume the diluted EPS will continue to grow at a historical CAGR of 25.9% for next 7 years, the fair share price is $9.84. Wait a minute! This is insane! Sunningdale Tech is only trading at $2 now. At $2 now, the market is according a forward CAGR of 1.9% for the diluted EPS of Sunningdale Tech. Either the market is very intelligent or very stupid from what I can see. Perhaps from certain potential weak spots in the businesses such as the volatile cashflows and challenging operating environment as mentioned earlier, the market is discounting Sunningdale Tech.

I also noticed that the diluted EPS of Sunningdale was also volatile as well over the past decade with some years swinging into losses. The significant growth in the diluted EPS came in only from 2015 to 2017. Previous years had much lower diluted EPS registered. Thus, I think it is better to watch out whether Sunningdale Tech can continue to register stable growth in it's diluted EPS. As such, I think I will perhaps follow the market's assumption that Sunningdale Tech will grow it's diluted EPS at CAGR of 1.9% as a conservative measure and see the current traded price of $2 as my final conclusion of it's fair share price. Any upside will have to depend on how Sunningdale Tech can stably grow it's diluted EPS and cashflows over the next 7 years.

Thus, a fair share price of $2 is not too low an estimate (factoring in a margin of safety for the investor) in order to give the company time in future to see whether they can stabilise their growth going forward in these two areas of their diluted EPS and cashflows, minimising their volatilities, and even avoid any potential losses. If they can do that, their share price will certainly have much room to run higher.

Not a call to buy or sell.

dyodd.