Tuesday, June 14, 2016

Another Request from Reader - Vibrant Group Limited

Although I have been holding Vibrant Group Ltd for some time, but I didn't really find time to write about it. So since there is a request from one of the readers, I shall do my write up on Vibrant Group Limited.

As indicated in my portfolio, I don't only focus on 1 way of investing. Other than stocks that passed the Triple S Scorecard, I also invest in dividend stocks, blue chips and deep value stocks.

Vibrant Group Limited falls into the category of deep value stocks.

Deep Value Investing is totally different from my Triple S Scorecard investing. I focus solely on the significant Discount to Net Asset Value and Business Model.

Anyway Vibrant Group Limited satisfied the criteria at that point and so I decided to invest in it...

Profile In Short

Vibrant Group Limited was formerly known as Freight Links Express Holdings Limited, and changed its name to Vibrant Group Limited in November 2013 to reflect the Group’s new core business activities and to provide a clearer identity, as well as to reflect more accurately its diversified business profile moving forward.  

Initially it was only a logistics company. But it has since expanded into 2 other business segment - Real Estate and Financial Services. 

Based on the Triple S Scorecard:

As stated above, there will be no Triple S Scorecard calculation for deep value stock.

Why So Good?

The discount to Net Asset Value - As per 3rd Quarter 2016 Financials, its net asset value is $0.6786. As of today's price of $0.335, the discount is more than 50%!

Active Business Expansion/Growth Plan - Business expansion in the real estate segment;

  1. It owns a 35 percent interest in GSH Plaza (Formerly as Equity Plaza), a commercial space located within walking distance of Raffles Place. This property will be for investment purposes. 
  2. It has also bought Cecil House, also located in Raffles Place, and intend to redevelop it into a 16 Storey Building. This property will be strata-subdivide and sold. 
  3. The Group has also been able to engage in the Government Approved Resettlement Housing Project in Jiangyin China, which is also guaranteed by the Government. They are currently into working on their 2nd resettlement housing.
  4. It has also established a Changshu High Tech Industrial Park in China, which is already 50% leased out.
The Hidden Value in Assets - Do note that from my research into the company, I realised it had more than what it reveals or rather it's Assets has so much hidden potential to be larger. Other than interest in GSH Plaza, owning Cecil House and the Changshu High Tech Industrial Park, it also has the following:
  1. 25% of China Southwest Energy Corporation Ltd – Mining and Trading of coal
  2. 21% of Freight Management Holdings Bhd – A listed firm in Malaysia that engaged in the freight and forwarding industry.
  3. 20.5% of Figtree Holding Ltd – listed firm in Singapore that specialises in the design and building of commercial and industrial facilities in Singapore, Australia, China and Malaysia.
  4. 35% of Plaza Ventures Pte Ltd – The firm is in charge of the development of GSH Plaza in Raffles Place.
  5. A freehold property, Palas Condominium, in Kuala Lumpur.
  6. Huge amount of Quoted Equity Securities, which includes about 8% of Sabana REIT.
  7. A $45 Million loan to City Harvest Church, which is secured against the 39.2% that City Harvest Church own in Suntec Singapore (worth at least $100 Million)
  8. An initial of $30 Million funds injected into a Sentosa Asian Credit Offshore Feeder Fund Limited, a liquid ex-Japan Credit Fund Investing in both hard and local currency Asian bonds. 

Sponsor to Sabana REIT - Oh... this is interesting. The company owns 51% of the property management arm of Sabana REIT and it is the sponsor to Sabana REIT. So if it need cash, it can always sell its logistic properties to Sabana REIT, and the management of Sabana REIT will definitely have to accept it.

Catalyst - With so many catalysts stated above, there is so much potential to increased the Revenue over the next 2 to 3 years - especially if all the Cecil House units are sold. 

Why So Bad?

Highly Leverage - The company has currently over $300 Million of Borrowings against $557 Million of Liabilities. This leverage is significantly high and any increment in interest rate will cause major increment in finances cost.

Slowdown in China - The slowdown in China is definitely happening. However, the company recent expansion into China, especially with its financial leasing services in China, may be a cause for concern. A downturn in China will lead to their customers unable to pay the debt and resulting in write-offs.  

Sabana REIT and Associates - Vibrant Group Ltd holds various stake in many listed company. With the economy on a downward trend and various company share price dropping, these mark to market assets will be affected - directly decreasing the net profit and asset value.

In Short

Once again, I bought Vibrant Group Limited due to its discount to Net Asset Value. The hidden potential of various assets is also a big draw as the discount to Net Asset Value could be bigger. Furthermore, there are so many catalyst over the next few years that could push the revenue up, which should directly impact the net profit.

Hopefully by then, the company will release some bumper dividend.

Current Price: 0.335 as of 12 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 0.305.

If you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page.

Please like our facebook page as well - T.U.B Investing.

8 comments:

  1. Thank you, I am new to your blog. I have limited time to read up on companies and you helped expose me to other companies that I don't pay attention too.

    Interesting articles. Please keep writing.

    ReplyDelete
    Replies
    1. Hi Bigcatblue,

      Thank you for dropping by and your encouraging words.

      I will do so.

      Thank you for the support.

      Regards,
      TUB

      Delete
  2. I am not so optimistic. I have held this stock since freight link time. Always disappoint. Maybe its biz model is too complex for most people to understand. They should try to be focus.

    ReplyDelete
    Replies
    1. Hi mslee888,

      Thanks for dropping by too.

      Agreed that their business model seems complex and the way they are growing can be scary too.

      However, my view is I am not looking for a multibagger here. just targeting some capital gain at 40 cents. In addition, Vibrant do give decent dividend which is another plus point.

      So with these factors, I think it is a good enough investment for me. At least I know I can sleep well at night.

      Regards,
      TUB

      Delete
    2. Got it...seeking not a too aggressive return should be alright.

      Delete
    3. Anyway thanks for dropping by and appreciate your view and comments.

      Delete
  3. Hey,
    I am also a new visitors on this blog. At first taking a look into your article I am very impressed with your approach. The prehistory of Vibrant Group Limited and its expanding business and info the way you presented really amazing and inspiring. Thanks for such informative and knowledgeable article. keep it up please.

    ReplyDelete
    Replies
    1. Hi SG Homes Needs,

      Thank you for the compliment!

      Regards,
      TUB

      Delete