Sunday, June 3, 2018

Big Idea 4

I bought a new company and announced it on my Facebook Page recently. The overwhelming likes made me revealed the company at that time. Thus, there was a dilemma in me whether I should announced why I bought that company or talked about the other company which I had re-invested in Jan 2018?

I decided that the latter - The company that I had re-invested in Jan-2018 - will be Big Idea 4.

I have written quite a lot about this company and invested in it slightly before April 2016. I sold the last of their shares in Dec 2017 at its peak and almost a 2-times bagger, after the company divested its main business and announced a mega-dividend. After the price came down, I re-invest in the company.

Reasons Why This Counter Qualifies as a "Big Idea"

1. Most "Liquid" Balance Sheet


Based on the above information:

Net Current Asset Value - $0.522

If we take Financial Assets and Other Receivables into account, the Net Asset Value will rise to over $0.648.

This value is 16% above the current share price.

Do note that the Financial Assets is related to their shares in another listed firm, and Other Receivables are related to the remaining amount from the divestment of its main business.

2. Still "Profitable" Business


Despite a drop in Gross Profit Margin, the Q3 2018 losses was due to an exchange loss not due to the current business operations. If this exchange loss was added back, the net profit will be $26k.

However, many people could potentially missed this and sold off this company too early.

Nevertheless, it is important to note that the Gross Profit Margin has dropped and I will continue to monitor the results in Q4.

3. Management 

This is something I am not sure if anyone has picked it up before. The company's current management are the sons of the biggest shareholder.

Rather than "giving a company" to the children to play along, this should be a way the biggest shareholder want a firm control of the company.

Do note that the children had experience in managing other listed firms before.

In Short

Currently the company's share price has dipped significantly. I had continuously added it at various level. This company now contributes to over 8.6% of my portfolio (Remember that these big ideas are supposed to contribute up to 50% of my portfolio?), with a loss of 11.4%.

Recently the company have also made an acquisition and many people, including me, do not reall have positive vibe about this acquisition.

Nevertheless, this is a company I purchase mainly due to the margin of safety above its net asset value.

In 2 months time, it will announce its full year results and more answers on the use of its cash pile could be reveal in its financial report. Therefore, I will decide then on what to do with this company. In the meantime, if the share price continues to fall much more, I may continue to invest more into this big idea!

Please do your own due diligence before you invest this counter (if you knew what it is).

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of all the SGX counters now! Only about $10 a month!

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

No comments:

Post a Comment