Sunday, May 7, 2017

Review of Singapore's Construction Sector - Part 3

Dear Readers,

This is Part 3 of the Review of the Singapore Construction Sector - the final review of the trilogy.

Part 1 was meant as a more qualitative approach, while Part 2 reviewed the counters via a quantitative approach instead. 

For Part 3, it will be rather short. I will basically be testing each selected counter against, what I am known for, the Super Scorecard.

Do read up on Part 1 and Part 2 here.

So these are the scores for the selected counters - Are you surprised?

Selected Counters
Score via Super Scorecard
DCF and Graham Method Valuation via Cash Profit
T T J Holdings Limited
13 – PASS
Fail
Nam Lee Pressed Metal Industries Limited
10 – PASS
Fail
Keong Hong Holdings Limited
9 – PASS
Buy – 0.958 and 0.479
Kori Holdings Limited
7 – PASS
Buy – 0.481 and 0.654
Lum Chang Holdings Limited
6
Buy – 0.483 and 1.217
Tai Sin Electric Limited
6
Buy – 0.455 and 0.802
OKP Holdings Limited
6
Fail
KSH Holdings Limited
4
Fail
Tiong Seng Holdings Limited
3
Buy – 0.703 and 0.716
Transit-Mixed Concrete Ltd
1
Fail
BBR Holdings (S) Ltd
1
Fail
Figtree Holdings Limited
0
Buy – 0.256 and 0.602
King Wan Corporation Limited
0
Fail
Huationg Global Limited
-1
Buy – 0.939 and 1.478
Swee Hong Limited
Ignore due to restructured and new shareholder

Basically 4 counters passed the Super Scorecard, while many more pass via the alternative valuation method - DCF and Graham Method.

However, although I am the creator of the super scorecard, but I am more confident of a counter passing the Super Scorecard via the scoring system rather than the Alternative Valuation Method.

Therefore, I will ignore the "Buy" calls via the alternative valuation method and focus on those that pass the scorecard.

The Counters That Passed The Super Scorecard

Out of the 4 counters, I am most surprised by Kori Holdings Limited passing the scorecard. 

One of the reason Kori Holding Limited passed is due to its high current asset figure, which is filled with trade receivables. Furthermore, its free cash flow over the last 5 years has been negative. Therefore I will be ignoring this counter.

For Keong Hong Holding Limited, it passed the counters due to its great free cash flow generation and high dividend amount. However, its balance sheet is weak due to slightly high liabilities. Anyway, I have always been rather biased against Keong Hong Holdings Limited and I will continue to stay that way unless its share price fall below 40 cents.

Although Nam Lee Pressed Metal Industries Limited and TTJ Holdings Limited passed the scorecard, but I preferred the latter than the former. 

This is due to 3 reasons:

- TTJ bid for projects and have more say in their expenses. Nam Lee's expenses' mainly due to raw material prices and do not have much influence in them.

- Nam Lee's revenue also has a huge chunk from this US or Europe company (Heard it is Carrier right?). There is a huge concentration risk and any changes of this customer's industry may cause Nam Lee's revenue to be negatively impacted. 

- TTJ has been actively moving into PPVC. PPVC is something I stated in Part 1 that I believe it will be the next innovation. 

In Short

Even with the above analysis, do note that I already have quite a few counters in the construction industry. Nevertheless, by the time you read this post, I will have already added TTJ Holdings Limited as another construction counter in my portfolio.

For those who is interested in Super Scorecard, do read up on the Launch of T.U.B Circle. If you are interested to sign up, feel free to contact me.

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Pssst... I will be doing a preview talk of The Super Scorecard Workshop and then The Super Scorecard Workshop. Take Note.

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