Thanks for the tip off; if his valuation is accurate, then should not go in now, as share price is already 41.5 cents today, because there's not much Margin of Safety left. I use a slightly different method which gives me a FY14 ROE of 23%, Owner's Earning CAGR of 32% over the last 5 years and an intrinsic value about twice what he gave; otherwise, I wouldn't dare to go in. But to each his own, one's got to trust the tools one uses in valuing a stock (subjective though it may be) or else it is not possible to be in this business.
I am more sanguine (than the analyst) for the following reasons:-
- the positive growth profile of the LED lighting industry (account for 40% of its revenue)
- solid financial position
- strong FCF
- strong working capital management
- established operations (> 20 years)
- proactive management
- sustainable dividend policy
In my view, the investing thesis is still intact and the risk reward profile is justifiable.
Interesting enough, I did a further analysis of its past 8 quarters of revenue data and came away with a finding that revenues should grow positively in current FY for both CE and ICE sectors. Valuetronics had recorded growing/strong revenue figures for the last 2 Qtrs.
Guys, this counter's on a roll! It's registering 43.5 cents now. Glad I got in based on recommendation by some of you. But we've got to beware this cut throat business; look at AIM doing a similar line with avionics & not in good shape!
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