Quote:
In terms of business activity, we have been working hard to fill up the
excess capacity left behind by the aforementioned drop in oil & gas orders.
Aerospace continues to be the main pillar of our business, where we are
receiving robust order flow from existing customers as well as enquiries
from potential new customers. The semiconductor customers that we
serve have also given us a steady flow of orders.
JEP Industrades, which we acquired in August 2015, has continued
performing well under our Trading & Others segment, providing
a base of recurring income for the Group.
End of quote.
Based on the annual report, the revenue by industry is as follow:
Aerospace – 52%
Equipment manufacturing – 13%
Trading and Others – 26%
Oil and Gas – 5%
Electronic – 4%
As per management comments -
1. aerospace sector – are receiving robust order flow from existing
customers as well as enquiries from potential new customers
2. semiconductor sector – customers that we serve have also given us a
steady flow of orders
3. Trading and Others sector – has continued performing well
To those who are following my post, pls note that I am
a long term investor. As a norm, when I take up a position
in a stock, I will hold until it reaches its fair or full value.
For valuation, the main yardstick I use is the current and projected
future price earning ratio of the company. Most of the time, my holding
period is minimum 6 months. Some can be as long as 3 years or more
if the forward price earning rario is low going forward.
There are many styles of investment – cyclical, fundamental,
turnaround, technical, traders, etc. I am basically in 2 areas –
fundamental and turnaround.
For turnaround – the key questions are:
Does it really turnaround or is it due to one-off-gain or other factors?
Can the turnaround be sustained going forward?
Other things I look at are – cash level; debts; nta; management;
52 weeks low n high, sometimes 5 year high n low (historical); dividend
and dividend yield etc etc.
For fundamental, many of the factors mentioned above apply – cash;
debts; nta; historical price high n low (52 weeks n 5 years); nta; dividend
and dividend yield etc etc. Divdend yield play a big part in my decision,
though i may trade it for high growth.
The most important point I look at is - trends .. revenue trend;
gross profit trend and net profit trend. If the trend is positive and
Valuation low, then I am likely to take a position.
I pay a lot of attention on the management comments and the things
the company are doing. Is it an active or passive company? I prefer
a company where i can see lots of energy in the management.
Incidentally, most of my picks are neglected low liquidity stocks which
are off the radar of most investors. And quite often these stocks become
popular later. As a rule i avoid hot stocks.
For info, most of the shares i picked have appreciated substantially ..
Sinostar Pec, Mermaid, Chasen. All these stocks were initially
unpopular neglected stocks.
This post is a response to those who emailed me, asking how i go about
picking my shares.
I normally go for 2 classes of shares - undervalued or turnaround stocks.
I avoid hot stocks and popular stocks. I also avoid following recommendations
from broking houses though i do read it.
If you study the write up on my other posts, you will be able to see the criteria
i used. Alternately read my first post on any company and you will be able to
see the reasons for my choice of shares. The reasons are the criteria i used.
To sum up, i look at the followings:
1. trend on the top line
2. trend on the gross profit
3. trend on the bottom line
4. the nta against current price
5. dividend n dividend yield if any
6. the valuation, current n future
7. historical prices, high n low &ndash 52 weeks or 5 years
8. management comments &ndash positive, negative or neutral
9. company' s activities n implications, eg JEP Holdings, company' s relocation
to Seletar Aerospace Park, laying foundation of company in the last 3 years,
expanding production space, adopting Smart Factory concept, acquisition of
JEP Industrades etc etc. What are the implications?
Hope above is helpful.
All the best!!!
ps: if time permit i will do a write up on turnaround stocks
Reasons for my optimism:
1. relocation to SAP (Seletar Aerospace Park)
2. bigger production plant
3. proximity to market
4 laying of foundations in the last 3 years
5. adoption of Smart Factory concept
6. presence of new executive directors &ndash new means less than 5 years
7. token dividend of 0.03 cts
8. acquisition of FEP Industrades
9. positive management comments from press release on 28 feb 2017
a) we are looking forward to a better year ahead
b) we are currently receiving promising levels of enquiries
from existing and potential customers.
c) we are also taking great care to streamline our production processes
building on the productivity and cost saving measures
d) will become more cost effective and efficient
building on the productivity and cost saving measures
10. positive comments from the Executive Chairman (Annual Report 2016)
a) Aerospace continues to be the main pillar of our business, where we are
receiving robust order flow from existing customers as well as enquiries
from potential new customers
b) The semiconductor customers that we
serve have also given us a steady flow of orders.
c) JEP Industrades, which we acquired in August 2015, has continued
performing well under our Trading & Others segment, providing
a base of recurring income for the Group.
Note: from the above comments, it seems that all sectors of their business
are positive.
Expectations:
1. 1st half result due to be released in aug should show some improvements
though I am not expecting much. This is due to the expenses incurred in
the relocation, setting up the plants and new machineries. All these imply
some one-off expenses.
2. 2nd half result should show a huge surge in profits as the company is now
more settled and focus.
3. if 2nd half result show a huge surge in profitability, 2018 should be a
very good year for the company, barring unforseen circumstances.
Results likely to be the best of the last 5 years.
Above is just my assessment of the company and I may be wrong about it.
Pls do your own assessment.
No intention to sell. Waiting for results in aug. Expecting some improvements but not fantastic improvements. Shld that happen, 2nd half results should be very good n 2018 should be much better, probably the best of the last 5 years. Keeping my fingers crossed.
