Monday, June 20, 2016

PNE Industries Ltd - Bumper Dividend Ahead

This update is long overdue.

PNE Industries Ltd has released their half year financials on 12 May 2016 and their share price rocketed up.

Rise In Share Price

You can read about my initial write up on PNE Industries Ltd here.
Since it was initially a stock that passed the Triple S Scorecard, I also did a review using the latest financials on the Enhanced Triple S Scorecard. The results is as per below:

Based on the Enhanced Triple S Scorecard:

PNE Industries Ltd passed the Enhanced Triple S Scorecard without much difficulty.
Despite my capital gains, I am not still not selling…
  1. Passed the Enhanced Triple S Scorecard – If you have been following my posting, you should understand that Enhanced Triple S Scorecard is much more difficult to pass than the initial version. Thus, by passing the enhanced version of the scorecard without much difficulty, this speaks volume of the stock’s balance sheet strength and cash generation ability.
  2. Sold their loss-making entity – Although I have covered this point previously, but I like to emphasize that they have "confirm plus chop" sold the entity at USD 7,366,298.22! 
  3. Family business – I miss out this point which bought up by Alpha Vulture recently. With the majority of the owners being in the Tan Family while the management only holds 38% of the shares, the management will not “bully” the minority shareholders since many of them are family members as well.
  4. Bumper Dividend to Come – Other than this half year dividend, I will be expecting another bumper dividend to come at the end of the financial year 2016. With all these dividend, my cost of purchasing these stock will be down significantly – giving myself a larger margin of safety.
What are the question marks?

Sunset Products and Business – Similar question still lingers in my head, whether this business can continue to grow and be profitable.

In Short

I will continue to hold PNE Industries Ltd as its fundamentals has not changed. However. I will be monitoring on its future direction when it announced its full year financials in November.

Currently with its net current asset per share of $0.773, it seems that there is still some margin of safety for new investor to come in. But based on my experience, since the stock is currently closed to its 52 week high share price, I will advise new investors to find other opportunities instead.

Current Price: $0.675 as of 20 June 2016.

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

Do note the author is vested in this stock/company at $0.570.

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