Valuetronics - "Thoughts on the market".

11 Feb 2014 13:51 - 11 Feb 2014 13:55 #19071 by josephyeo
Valuetronics result is out today. Results are above my expectations. Below are same basic details:

1. Cash holding has jumped to HK$402,395 or S$65.9 based on exchange rate of S$1:HK$0.1639

2. Profit at 9 mths (March to December 2013) : HK$108,432 or S$17,772. Likely to show record profit for current financial year.

3. Company has no debts.

4. Going forward management is positive about the company.
Quote : "Barring unforeseen circumstances, the directors expect the Group to achieve strong growth in
profitability for financial year ended 31 March 2014."

5. Expect very good dividend for full financial year based on historical payout ratio.

6. Has quote earlier posting for easy reference.

Am heavily vested.

Trading between 26.5 to 27 cts lately. Strong support seen at 26.5 cts. To recap, below are the reasons why I like Valuetronics :

Reasons for picking Valuetronics are :

1. Consistently high dividend .

Year 2013 : HK 8.0 cts per share

Year 2012 : HK 16.0 per share + special div of HK 1.0 cts. Total HK 17 cts.

Year 2011 HK 14.0 cts per share.

2. High payout ratio.

Year 2013 : 36.5 %
Year 2012 : 46.6 %
Year 2011 : 40.9 %

3. Expect high dividend payout of 2.23 singapore cts per share this financial year.

Half year profit: HK 72,901,000. Assuming the same level of profit is maintained, the full year profit would be HK 145,802,000.

Assuming a payout ratio of 35% (low estimate) the total payout would be HK 51,030,000. The payout per share would then be total payout amount divided by the number of shares.

HK 51,030,000 divided 365,188,750 shares = HK 13.97 cts.

In S$ terms n based on exchange rate of 1$HK to S$0.1629, the dividend per share in Singapore currency would be 2.23 cts.

4. Decent profits for the past 3 years.

2011 - 19.7 mil
2012 - 21.2 mil
2013 - 12.8 mil / 19.3 mil (19.3 mil from continuing business)

5. Good profit trend in last 2 quarters:

Apr to June - HK $33274 in S$5,420 (x1000)
July to Sept - HK $39627 in S$6,455 (x1000)
1st 6 months or half year results - HK $72901 in S$11,875 (x1000)

Note that the first half year profit is almost equal to the whole of last year profit. Hence, this year full year profit is likely to show a great improvement over last year.

6. Company has no debt.

7. Company has cash of HK $288732 or S$63.3 mil.

8. Company has only 365,188,750 number of shares. This is a small number compared to most companies.

Last edit: 11 Feb 2014 13:55 by josephyeo. Reason: Adding another sentence
The following user(s) said Thank You: Val

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11 Feb 2014 14:34 #19076 by Value Investor
Hi Joseph,
I agree with you and had been watching this counter....had bought some at #0.29 and accumulating....I am confident that the market would take notice of it very soon. leading to a run.
All the best !:)

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11 Feb 2014 14:54 #19077 by lotustpsll
One of my core small cap play too. Great 3Q and the chairman's statement is generally positive. Steady focus on cash management is yielding results.

If you extrapolate the numbers we could be looking at forward PE of about 4.4. Better still if we account for the cash holdings adjusted PE drops below 2.

A value small cap gem.

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11 Feb 2014 14:56 #19078 by lotustpsll
Also, I expect a dividend of hkd18 cents for coming FY. This means a potential dividend yield of over 10%.

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13 Feb 2014 14:13 #19103 by Val
Cool one.

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14 Feb 2014 10:29 #19115 by ontheball
I bought some shrs yesterday as the power of Joseph Yeo's analytical prowess was too hard to resist.

Joseph, of the 5 stocks that you hv recommended, which is the one that you are most heavily vested in and which is the least?

Also, when you are analysing a stock, what is the first and most important factor that you look for. Is low PE ratio very important for you?

Looking forward to learning from you.

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