2Q Stock Picks

Forum is open for you to post your stock picks. Pls give reasons why you are highlighting the stock(s) - we can\'t read your mind. Also, state the stock price at the point of your posting & also the dividend (if any) that will be paid out in 2Q.

Time Watch 20.5:woohoo:

1) Spindex Industries ($0.28) - 2010H1 results ended Dec 2009 showed a very strong recovery to pre-recession levels. - 2009 EPS about 4cents, 2010H1 EPS about 2.5cents - NTA/share 46c - Net cash per share is about 18 cents - 2009 dividend: 1.4c (5% yield) 2) Jaya Holdings ($0.67) - Debt restructuring woes over, but share price not fully recovered. - Net gearing declined to 0.37 in Dec 09 from 0.71 in Jun09 - Shipbuilding division expected to be weak, but chartering business should benefit from offshore activities. - NAV/share: 57.4 cents - EPS: 4.58 cents in 2010Q2 (4.21c in Q1)

I just blogged about Courage Marine as a BUY. Price: 20.5c Established in 2001, the company has exposure primarily in Greater China. This is their niche in the industry and fits well with my aim to look for a company which will benefit from a stronger and recovering Asia. Being wary of the large capital expenditure that shipping companies have to make, I was very pleased to find that Courage Marine only buys and operates second hand vessels. This maximises return on investment and minimises depreciation cost. Of course, what I then worried about was the cost of maintenance but they have been able to manage this as well, keeping cost of maintenance low. Next, I looked at gearing. Courage Marine has very low gearing. Gross gearing as of 31 Dec 2009 was at 6.2%, a reduction from 8.5% a year ago. Taking into consideration that they have cash and cash equivalents of more than US$43m and total debt of only US$6.8m, Courage Marine is in a net cash position! Courage Marine is not immune to economic slowdowns but through prudent management, it managed to reduce its debts and declare a dividend of US 0.47c per share for the year ended 31 Dec 2009. Based on the last done price of S 20.5c, that is a yield of 3.1% (based on US$1 = S$1.37). Not too attractive but try looking at the preceding three years when it declared dividends of US 1.888c, US 3.115c and US 1.41c. Sounds more interesting? This is a company that shares its profits with its shareholders. Courage Marine has a NAV of US 10.41c per share. At an exchange rate of US$1 = S$1.37, the NAV is S 14.26c per share. At the last closing price of S 20.5c, it is now trading at a premium of 44% above NAV which I do not think is expensive. Finally, what really caught my eye is the strong return to profitability in the fourth quarter of 2009. Compared to a year ago, gross profit in the fourth quarter increased 523% and net profit margin improved to 25.9%! I fully expect its revenue and profits to continue improving in 2010. Taking last quarter\'s EPS as a guide, assuming that things stay stagnant, Courage Marine would have an annual EPS of US1.08c or S1.48c which, based on a share price of 20.5c, gives a PE of 13.85x. Not expensive. EPS is more likely than not to improve in 2010. Chart: singaporeanstocksinvestor.blogspot.com/2...ves-of-recovery.html

Bestworld, thank you for your posting but could you kindly offer some reasons for your stock pick? Bestworld wrote:

Time Watch 20.5:woohoo:

We thank you for your postings in the Time Watch thread, but for the convenience of readers, could you put some reasons in this 2Q stock picks thread?

I pick these 2 stocks for the common reason that both companies are reported to be in the process of selling some of their assets, which could lead to substantial cash flow, some of which could be dished out as dividends: 1. Heeton – reported to be looking to sell its 50% stake in Sun Plaza. Sale price is estimated to be at least $300m, so Heeton’s share is $150m. Also, co has sold its wet market operations, and about $23m cash flow from this will come in this quarter. Hence, cash flow from these 2 sales: $173m. Number of shares: 223.846m, ie, cash flow per share: 77.27cts. Share price now: 49cts. RNAV per share, according to my estimate is $1.20 (recent Westcomb report says $1.16). Co does have outstanding loans, but part of the loans is for land purchases and construction of condos which will be repaid as the units are sold and construction progresses. I reckon the portion of the cash flow not needed to repay loans could still be quite substantial, perhaps in the region of 20-30cts per share. Other catalyst: successful sale of its condo projects (Lumos, 74 Grange and Mitre hotel sites). 2. Stamford Land – looking to sell its Perth office block for more than A$140m, according to recent Lim & Tan report. Cash flow from a successful sale could work out to about 20.7cts per share. There will also be another $20+m inflow from the sale of its Pasir Panjang warehouse, adding another 2.3cts per share. Total cash flow: $23cts. Ow Cho Kiat is well known for divesting assets in his other SGX listed company, Sp Ship, and then distributing bulk of the cash to shareholders. He could do the same for Stamdford Land. Note also that depending on how much one values St Land’s chain of hotels in Australia/NZ, RNAV per share could be as high as $1.10-1.30. Other catalysts: profit from Sydney apartments in FY 2011 (profit recognized only on completion, so it’s gonna be a lump sum) and sale of its hotels (this is the big one. Co had an unsolicited offer 2-3 years ago). Whether these stocks will rise this quarter or later will depend on when the 2 companies officially launch their assets for sales and whether the sales will be successful. The good thing is that both companies have rather high RNAV to support their share prices. The risk: on the charts (across the board), we are no more in good trending/very safe zones.