Recently this company caught my eye when someone compared it to TTJ Holdings Ltd on valuebuddies.
|This comment is by Ksir on valuebuddies|
After reading the comment, I took a look at its latest financial statements and spotted this specific paragraph;
This paragraph amazed me. This is because I remembered I read SG Thumbtack Investor blog posts (here and here) on this company before.
Quoted from the 2nd post, SG Thumbtack Investor stated that "...upon TOP, the company’s income statement will show a nice boost to earnings of approximately 6.5 cents, and the balance sheet will have a mega boost to cash and cash equivalents of ($19.9 mil due to it’s 35% stake + $19.3mil due to loans extended to the JV) = $39mil approximately."
Then I remembered B's post on catalyst plays working out for him. So, I started thinking if I should enter into this company AGAIN. Yes, I had invested in this company before, using the deep value stock strategy, and made a gain of about 16%.
If you still do not know which company I am talking about, it is BBR Holdings (S) Ltd.
As per my usual standard, I did my analysis starting with Enhanced Triple S Scorecard with Dividend Scorecard Portion (Present Price of $0.181 as of 3 Dec 2016):
Yes, as per the pictures above, this stock fails the Enhanced Triple S Scorecard with Dividend Scorecard Portion.
However, I decided to do something different - This will be the first I try something new on the scorecards.
Since we understand from the above thoughts on the possible changes to the financials, I will try to change the financials' figures to incorporate the expected changes if Lakelife Executive Condo TOP at the end of 2016.
1. Expected Net Cash From Operating Activities and Capital Expenditure For the 4th Quarter of 2016
As of 3rd Quarter of 2016, the company already has $22 Million of Net Cash from Operating Activities. After adding the expected $39 Million of cash (as indicated by SG Thumbtack Investor), the total net cash from operating activities can be as high as $61 Million.
For prudence sake, let's deem it as only $50 Million.
As of 3rd Quarter of 2016, the company's capital expenditure has been $4 Million. Let's take the total capital expenditure as $15 Million. This figure is enlarged for prudence sake.
2. Expected Revenue and Net Profit For the 4th Quarter of 2016
Let's say Revenue for 4th Quarter of 2016 will be $50 Million, which is slightly less than $53 Million in 3rd Quarter of 2016.
As for Net Profit for 4th Quarter of 2016, let's just deem it as $19 Million.
3. Expected Cash, Current Assets, Non-Current Assets, Current Liabilities, Total Liabilities, Shareholder Equity and Bank Borrowings
Firstly, let's predict the Cash amount - $33 Million + $20 Million (Amount Returned from Loan from An Associate). The profit of Lakelife Executive Condo will be deem to fully pay off the Bank Borrowing.
Thus, Current Assets will add another $20 Million.
Loan from An Associate of $20 Million will then be deducted from Non-Current Assets.
Since Bank Borrowings are deem to be fully paid off, bank borrowing of $3 Million will be deducted from Current Liabilities and $15 Million deducted from Non-Current Liabilities.
As per formula, Asset = Liabilities + Shareholder Equity:
Since there is no change in Asset and a negative of $18 Million in Liabilities, then Shareholder Equity will be an increase with a positive $18 Million.
With the above changes, let's test out the Enhanced Triple S Scorecard with Dividend Scorecard Portion (Present Price of $0.181 as of 3 Dec 2016):
Amazingly, BBR Holdings (S) Ltd passed the portion of the Enhanced Triple S Scorecard.
The above result meant that if I purchase BBR Holdings (S) Ltd at the current price, AND THE FINANCIALS TURNS OUT THE WAY AS I PREDICTED, the company will be deem to be undervalued at the current price.
I will not be talking about the other qualitative aspect of BBR Holdings (S) Ltd, as there are enough said in the forum and SG Thumbtack Investor post.
Finally, with the above positive change in score of the Enhanced Triple S Scorecard with Dividend Scorecard Portion, I intend to invest in BBR Holdings (S) Ltd if the price stay below 0.181.
Current Price: $0.180 as of 5 Dec 2016.
Please do your own due diligence before you invest in this stock.
Do note the author is intend vested in this stock/company.
For those who are interested in the Enhanced Triple S Scorecard, do not hesitate to contact me directly.