Saturday, July 2, 2016

Vibrant Group Limited - Full Year Results Are Out

Vibrant Group Limited just released their results a few days ago.

I got excited about the dividend and commented on valuebuddies thinking that it was a great announcement and got "slapped" with the reality. The dividend is actually much lower since it was a post consolidation dividend. If based on previous year dividend announcement, after share consolidation, it should be 2.75 cents (as compared to 1.80 cents declared for FY 2016).

The Conversation In Valuebuddies

Anyway you can read about my previous detailed write up about Vibrant Group Limited here. Thus, I am not going into details for the FY 2016 financial statement.

Currently, this stock is in the money for me but I am still not selling because...

1. Price is Still Significantly Lower than Net Asset Value - Net Asset Value still remains close to the figure I stated previously, at $0.6702. The current share price of $0.350 is still about 47% discount off the Net Asset Value.

2. Dividend of $0.018 - Although this is still much lower than the previous year dividend (Should be $0.0275 if based on last year dividend after 5 to 1 share consolidation), but for me who only bought Vibrant Group Limited after share consolidation, this is a piece of good news since the dividend yield is at 5.1%.

3. Proposed Disposal by Shentoncil Pte Ltd of 60% of the Shares in Eceil Pte Ltd for $75M - This announcement caught me by surprise. However, this is a very good piece of news.

As per previous announcement, Cecil House is valued at $110 Million.

Then, as per current announcement, Vibrant Group Limited sold 60% of Cecil House for $75 Million. This meant that 100% of Cecil House, currently, is valued at $125 Million.

Without doing anything much, Vibrant Group Limited has made a steady gain of about 10%.

What are the question marks?

1. Still Highly Geared - The company has increased its bank borrowings to over $448 Million. This is a significant amount and will have a toll on its cash standing.

2. Much More Associated within China - With the sale of the Cecil House to another China Company, the company is associating itself much more with China Firms. This is a worrying trend for me due to all the past scandals of these China Firms.

In Short
I bought Vibrant Group Limited based on deep value investing basis and that has not changed. The dividend is the icing on top of the cake. In addition, the partial sale of the ownership of Cecil House for the purpose of reducing their debt amount gave me some relief that at least the management is not only focus on increasing its asset, but also managing a "balanced" balance sheet.

Current Price: $0.350 as of 2 July 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.


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2 comments:

  1. Hi TUB

    How about their associates with Sabana reit ? What are your views ?

    I had their shares in 2013 (freightlinks) but divested at the same year due to their shift of focus on business and with CHC at that point of time.

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    Replies
    1. Hi Small Time Investor,

      They are the sponsor of Sabana Reit and also own 51% of the management arm of Sabana REIT.

      Basically, in view of the above, they have the power to shift their assets over to Sabana REIT easily. This will allow them to cash out of their fixed assets easily, especially their new chemical warehouse.

      If you own Vibrant Group, I guess its a good time that they have this relationship with Sabana REIT. If you own Sabana REIT, I will find a good time to offload all in view that minority shareholders at the end of the day may not have enough power to make changes in the REIT actions.

      Regards,
      TUB

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