FAIR VALUE -> S$2.05, currently trading at S$2.01
THESIS
My original target price for OSIM based on the comps as well as the potential EBITDA per store was S$1.80, updating that for recent earnings and comps, my updated price target is S$2.05. OSIM has surpassed that target and could potentially continue the trend however, there are two things that concern me:
It was announced on Friday that Indofood Sukses Makmur had bought a 15% stake in China Minzhong through a rights offering at a 10% discount to the last traded price. This will inject S$85m into China Minzhong, which will be used to expand the industrial farming operations.
While this is marginally dilutive, it doesn’t change my original hypothesis. I still believe that China Minzhong is a good investment at these levels.
Fair Value -> S$2.35, currently trading at S$1.14 (revised because of dilution)
Fair Value -> S$2.70, currently trading at S$1.04
I’ve had a couple of readers request that I look at China Minzhong. It appeared on my original Singapore screen but I passed it up because of the S-Chip link. I subsequently decided to have another look at the company and since it’s had a bit of a run lately, I thought I’d see if it’s justified on valuation grounds or just a victim of the January effect.
Thesis
China Minzhong is a leading vertically integrated vegetable processor in China currently trading at 4.0x 2013F earnings. As the free cashflows continue to grow with earnings and market begins to understand and appreciate the business China Minzhong has the potential to see a rerating and failing that the growing earnings will mean an investor will still be compensated for the risk taken.
Continue reading
Fair Value – >S$4.00, currently trading at S$1.35
Thesis
STX OSV (STX) is currently stuck in the mud because of pending rumours of a fire-sale to an Italian Ship Builder (Fincantieri). While the EV/EBITDA multiples and high ROE suggest that STX is worth significantly more than its current price (>S$4.00), rumors circulating surrounding the sale are suggesting that the sale could go ahead for 900bn KRW, which would only represent ~S$1.60 vs the current price of S$1.35.
Continue reading
Fair Value –> S$1.80, currently trading at S$1.4650
Thesis
OSIM is a high margin business that is producing lifestyle products targeted at the increasing upper-middle income demographic. OSIM is currently expanding existing store footprint, while deploying cash that was raised via a bond offering in other strategic investments and share buy-backs. As the current cash hoard is used the business will return to previous RoE levels, which at ~50% beats the competition.
Continue reading
I don’t want to appear like as an evangelical sell-side preacher but I’m not going to spend my time looking at companies if they don’t appear to have merit in the first place. This will result in a majority of my posts representing a positive view. Nevertheless, I’ll still post information on the research I do which results in me not pursuing an idea further.
Fair Value – S$1.10, currently trading at S$0.18
Thesis
Consciencefood Holdings (CSF) was able to obtain >50% ROE prior to the IPO. I believe the business will be able to get back to similar ROE levels either through acquisitions or returning capital through dividends.
The ROE for CSF has is significantly better than peers in the food manufacturing industry. The fact that there hasn’t been a lot of corporate activity since the IPO suggests that management isn’t likely to make any rash decisions.
Continue reading
It’s been a while since I last posted and the only excuse I can give is that life got in the way. I recently started up at a new job which slightly curtailed my research efforts. However, I’ve managed to pull together a couple screens on the various countries that I want to look at and thought it worthwhile to share.
Continue reading
I’ve recently been looking into the regulations surrounding setting up a formal fund management company in Singapore. There have been a number of proposed changes to the regulatory framework recently, which will limit new fund managers who want to set up shop in Singapore. While these regulations won’t stop a majority of fund managers setting up, I’m unsure whether they’ll have their intended consequence – increasing investor confidence and reducing the impact of a macro shock – in the current form. A more finessed version would be a more appropriate remedy for an industry that has been chewing on a bitter pill for the past couple of years.
Continue reading