Sound Global

qwerty89
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10 years 9 months ago #14900 by qwerty89

Sound Global was created by qwerty89

I have taken a look at Sound Global and think that it does offer some opportunities for those who are willing to wait.

The full write-up here:
sgvalueinvesting.wordpress.com/2013/07/0...global-762013-0-635/

I shall highlight just the key points here:

1. The CEO recently made an voluntary delisting offer at $0.70. Current price is $0.64. If the deal goes through, it's a quick 10% gain. If it does not, it's a 10% loss (assuming the price falls back to previous level of $0.57.)

2. The Company is based in China and is in the water treatment industry, which is now booming because of the need to comply with new environmental regulations (according to the 12th 5-Year Plan).

3. The Company has historically enjoyed strong operating results, with consistent revenue and profit growth. It is not expensive using traditional pricing metrices (eg. PE, EV/EBITDA, etc.)

4. Even if the deal does not go through, the current price of $0.635 is still attractive, although any material upside will now take a few years to realise. As the water projects mature, the Company will enjoy strong positive cashflows with a good likelihood of dividend increases.

5. The Company does have convertible bonds and warrants, but these have exercise prices that are out-of-the-money, so dilution risk is limited.

In sum, whether the deal goes through or not, I think Sound Global is still attractive. If the deal does not go through, there are no other clear catalysts in the short-term, so the main "risk" is that upside will take 1-2 more years to realise.

Any opinions welcome.

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