Sunday, January 3, 2016

PNE Industries Ltd - Sunset Industry?

For the 1st post of 2016, as per what I said in the previous post – to continue with more writing of analysis of companies I owe or shortlist or just “kaypoh”.

This will be in line to promote the use of Triple S Scorecard and it will also show the readers how it will help with the analysis of the company. I will also try to track the price changes and update the analysis once the quarter results are out.

So today the stock we are talking about is PNE Industries Ltd.

(If your mind is thinking WHAT IS THIS? Be prepared for more of such reactions in future. Cause I will try to dig up all the hidden gems in this blog. Stay Tuned for more!)

Profile in Short

PNE Industries Ltd is a company that manufactures and sells electronic, emergency lighting, and electrical appliances primarily in Europe, Malaysia, Singapore, Indonesia, and the People’s Republic of China through two segments, Contract Manufacturing and Trading. It was incorporated in 1999 and is headquartered in Singapore.




(If you are thinking of this as a sunset industry, you maybe right – Business wise. However, it has surprised me every single time with good profit margin and dividend yield. I had this stock since it was 0.09+ before consolidation. After averaging up till now, my purchase price is still below the Net Current Asset Price [(Current Asset – Total Liabilities) / Total number of shares].)

Based on the Triple S Scorecard:




Why So Good?

Triple S Scorecard say it’s a Value Stock – Company has been able to maintain a strong balance sheet with a good margin of safety (not fantastic) and no debt. In addition, the company has been able to maintain a good margin (not fantastic as well)  and the profit margin in the recent years has even gone higher!

Consistent and Increasing Dividend – Company has been able to maintain giving out a consistent and increasing dividend since 2008. It was able to give special dividend in 2014 and 2015.

Sold Loss-making division – Company has sold off its loss-making division recently and make a gain from this Sale. This indicated the management takes necessary actions when needed and these actions seem to be correct every time.

Why So Bad?

Sunset Products and Business? – The question of whether how this business can continue to grow is still questionable in my view. However, if you look at the value investing, it is this kind of traditional business that is forgotten but it is still required. The business must continue to maintain its profit margin if not it will fail eventually.

In Short

I have held this stock for a number of years already and it has served me well. Currently it is still price below its net current asset per share of $0.727. Thus, solely based on this point, I believe the stock has yet to rise to its potential. In addition, based on balance sheet pricing (disregards the earning potential), there is still much more the stock can rise.

Current Price: 0.600 as of 3 Jan 2016.

Please do your own due diligence before you invest in this stock.

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