Sat Aug 22, 2009
The company's website explains where all that cash comes from. There were two placements, one in 2006 and 2007. Numbers are:-
Year: 2006
Amount raised: $14.7M
Placement price: 89 cents
Year: 2007
Amount raised: $26.7M
Placement price: 53.6 cents
So, a total of $41M was raised at placement prices way higher than current market price. It is also obvious that they have not found an appropriate application for all that money, and their financial statements say that they are indeed cautious about how to use it.
There is no such thing as a free lunch, but anyone who buys at current market price will be getting a very cheap lunch, which is heavily subsidized by the two placement investors.
There is however, a flip side to all this money. If they don't find a profitable use for it soon, it may be seen as if the management does not know how to do business. If so, the market price will probably not move anywhere.
Sat Aug 22, 2009
Tr@der wrote:
2007 -> 66.39 mil
2008 -> 19.3 mil
2009-> 17 mil year to to date and these new contracts they have been expecting for some time back
But for this kind of business in oil/gas project implementation I think it is hard to tell when are they going to win next orders
I do agree with the irregular contracts winss. 2007 was a freak year for ADV with its profits being at an all time high of 12mil.
Let us see the contract win size per year.
2005 - 15.7mil (Profits = 6.9mil)
2006 - 18.7mil (Profits = 3.5mil)
2007 - 66.4mil (Profits = 12.2mil)
2008 - 19.3mil (Profits = 7.4mil)
2009 (Jan - Aug) - 17mil (1H Profits = 4.96mil)
Generally, ADV gets around with 15-20mil of contracts per year. 2007 was a freak year (perhaps due to the over-bullish economy). Once the Biogas kicks into operation, we can see some small amount of growth in the topline. With continued contracts wins of 18mil a year, ADV will continue to bring about 7-9mil of profits and around 2cents of dividends a year.
If you take away that cash hoard, and pretend the placements never happened, they would still have gotten the same results. In fact, the ROA and ROE will look even better.
It means that they are fundamentally OK, and that cash can be considered a huge unimpeded reserve that they can draw on anytime. They also seem to be paying dividends from their retained earnings of $26M, so that sounds very appropriate.
That cash provides a very very solid price support at 18.8 cents, and barring a massive screw-up on the part of ADV, the only way can only be up.
So far, the main risk I see is that, they don't know what to do with the placement money. (A pretty weird risk, though)
Sat Aug 22, 2009
This Company has 18 Cents Cash and NO DEBT
Prospect: 60 mils order which will last them for 1.5 year and by the end of 2010 they need to secure 60-70 mil order to keep them going
This 60 mils will bring in 3 cents/share net income or 18+3 =21 cents
trade receivables are to be collected as there are very low chances of big china oil going bankcrypted overnight so by end 2010 we shall see
Total net cash of 24 cents.
The question is how is bussiness going forward ?
It is tough, cotract was secured mainly from China only but it has slowed down considerable and ADV has difficulty maintain or penetrate other market
2005-2006 seeing them going in big way to KOREA but now zero contracts
Other investments
1) bought some shares in Guidedway (1-2 Mils)
2) bought into a China water treatment company (5 mils) which I think NOT A GOOD one as I don't see small water/wase water treatment can survive in China and they they will *censored* in lot of cash
See Asia Envi, Asia Water.. Biotreat and CNA to see if you are going to make money with this third rated water treatment technologies/companies
ADV is little desperated
The way going foward shall be graduallly distribute out cash.. at the rate of 2-3 cents a year while focus on the operation efficency and secure more contract
To acquire business i think no, what can they buy with 57 $ mils ?
at 22.5 cents it is till good for me to buy
Sat Aug 22, 2009
This company is a Cash Cow and I do not say that because of the 57mil cash hoard it has. I say this because no matter how bad the economic climate is, from 2004 till now, it has maintained postive operating and free cashflow. This means that its business and dividends is sustainable.
Despite the drop in revenue, its profits has actually increased compared to last year. This is due to an increase in its margins. Not many companies have been able to do so this year. I rather, a drop in revenue and an increase in its cashflow and profits as opposed to increase in revenue and an immense drop in its profits due to its weakening margins.
Its profits and revenue (while always positive) has been on a up and down journey due to the economic climate. If we recover from this crisis, I expect its profits to rise as well.
Moreover, I like this company because it distributes quite a huge chunk of its profits back to the shareholders. Instead of spending it on acquiring new coys or questionable ventures, they maintain their simple business and reward shareholders consistently.
Free Cash Flow - 5.0mil
Operating Cash Flow - 5.5mil
Dividends paid - 3.038mil.
Aug 21, 2009
Without a detail look into their financial statements, this is what immediately comes to mind:-
1. Scenario 1 - Conservative view - Market goes up really slowly
1.1 There is reason to believe that dividends will be around 10% at current prices
1.2 There is reason to believe that it can go up to a very conservative pre-crash mid-range of 32.5 cents (between 30 and 35)
1.3 There is reason to believe that there is a support at 18.8 cents (cash)
If so, then a buy now can be reasonably expected to yield 2.4 cents (dividend) + 10 cents (capital gain) in about a year. That is 12.4 cents and amounts to more than 50% gain for what looks like a pretty safe stock (must verify that cash hoard that they say they have).
2. Scenario 2 - Very conservative view - Market crashes and pops back
2.1 There is reason to believe that it should bottom out at 15 cents (July bottom)
2.2 Averaging out on a 1:1 basis at 15 cents works out to (23 + 15)/2 = 19 cents
2.3 There is reason to believe that in event of a crash, the recent high of 25.5 cents is reachable in a year - Capital gain - 25.5 - 19 = 6.5 cents
If so, then a buy now, crash, with averaging later can be reasonably expected to yield 2.4 cents in dividend and 6.5 cents capital gain = 9 cents. That is almost 45% gain. Probably also in 1 year.
Both of my quick estimates are actually very boringly conservative. But a gain 40 - 50 % gain for a stock with so much cash (i.e. pretty safe), is actually very very good. More likely, a 100% gain is quite imaginable.
Aug 14, 2009
Found this gem.
Net profits are growing and will overtake the FY 2008 performance. Net cash of 55 mil SGD, no debts and equity of of 73mil. Its a SINGAPORE coy and its generating positive operating and free cashflow. The dividends has been increasing yearly since 2004. The dividends of 1H 08 was 0.7cents but now its 1.4cents for 2009.
Share Price - 25cents
1H EPS - 1.76
Annualised EPS - 3.4cents
PE - 7.4
1H dividends - 1.4 cents
Annualised yield - 10%
NAV - 23.85 cents
Net Cash/Share - 18.8 cents
Strong coy with good balance sheet, excellent dividends, no gearing and making good profits.
Aug 15, 2009
NRA Capital 120809
Surprised with better margins. Advanced Holdings Ltd (ADV) surprised with better than expected gross margin of 31.7% in 2Q09. In comparison, gross profit margins for 1Q09 and 2Q08 were 27.5% and 26.7% respectively. Although revenue was within our expectation, the improvement in gross margin has thrown our original forecasts off for the year. We have adjusted our estimates and consequently, gross margin is now likely to come in upwards by approximately 3ppt.
ADV attributed the gross margin improvement to better project cost management and a more favorable revenue mix. We understand that cost management accounted for the majority of the margin improvement.
Bumper interim dividend of 1.4cts per share & hordes of cash. ADV also declared an interim dividend of 1.4cts per share which was already more than the 1.25cts in FY07 and 82% of the 1.7cts in FY08. We estimate full year dividend to be 2 cents, giving a yield of 8.9 per cent at the last done price. ADV continued to be in a strong cash position with zero debt. It had $57.2m in cash as at 1H09. This represented cash per share of $0.188, 83.6% of its current share price of $0.225. ADV does not appear to have made any headway yet in its search for M&A targets and holding substantial cash may not be particularly fair to investors. A successful value-enhancing acquisition will be a catalyst to stock price re-rating.
Current outstanding orderbook at $60m. This included $17m worth of new contracts announced on 14 Jul 09 which was not expected to be recognized in FY09. Excluding these contracts, outstanding orderbook was $43m as at 1H09. We forecast approximately 70% of this to be fulfilled by FY09 and the remainder to be recognised only in FY10. While orderbook is at a healthy level, we have not seen much orderbook growth for the past few quarters. We would expect revenue to suffer a decline in FY10 unless orderbook growth picks up in the remaining half of the year.
Sources of growth. ADV expects China’s 4 trillion yuan stimulus package and plans to develop 40 petrochemical projects in the next 3 years to be sources of opportunities for growth. It is also actively expanding its clean energy and environment solutions segment which we foresee could be the key area of growth for the company. However, the projectbased nature of the business would mean unstable revenue stream. We continue to monitor ADV for any significant orderbook announcements. We believe that order wins will improve from 4Q09, spurred by China’s stimulus plans and renewed confidence in the economy.
Maintain BUY with fair value at $0.27. We have revised our forecasts with gross profit margin being the key change in our estimates. We have maintained our revenue forecasts and made minor adjustments to other estimates. Estimated EPS consequently increased by 22.9% - 35.54% for the next 3 years compared to our previous forecast. We raised our fair value to $0.27 based on our DCF model. Implied P/E is 11.3x FY09F EPS and 14.1x FY10F EPS. Stripped of cash per share, implied P/E is only 3.4x and 4.2x respectively. We maintain our BUY recommendation on the stock.
Aug 15, 2009
Stock Fundamentals
Historical EPS ($)
0.02544
NAV ($)
0.2385
Historical PE
12.186
Price / NAV
1.300
Dividend ($)
0.017000
52 Weeks High
0.400
Dividend Yield (%)
5.484
52 Weeks Low
0.090
Market Cap (M)
94.180
Issued & Paid-up Shares
303,807,000
Notes
a.Based on latest Full Year results announcement.
b.Based on latest results announcement (Full Year, Half Year or Interim).
c.Rounded to the nearest thousand. Updated on 13/08/2009
d.Dividend is based on latest Full Year results announcement and excludes special dividend.
IPO Information
Listing Date
Sep 23, 2004
IPO Price
0.077
Current vs IPO Price (%)
302.60
First Day Close
0.123
First Day Gain (%)
59.7
No comments:
Post a Comment