Powermatic Data Systems

Anyone noticed anything about their hidden gem of investment property

(16-04-2015, 09:41 PM)GiraffeValue Wrote: Anyone noticed anything about their hidden gem of investment property

Please take some time to read the entire thread....

(16-04-2015, 09:41 PM)GiraffeValue Wrote: Anyone noticed anything about their hidden gem of investment property

haha yes. The main point of this stock is its undervalued building. Even if you were to calculate using the other lower value in the balance sheet for the building, you will notice that there is still a margin of safety in this stock.

Wow, read that Powermatic is audited by the Big 5, RSM Chio Lim LLP.
Dunno if the Audit Engagement Partner is the same as that of Trans Cab which flopped the IPO last year?

If so, then I as an investor really no confidence in its financials. Very risky

So does anyone knows why the board doesn't to use F/V instead where they could simply just increase its balance sheet figure?

1) Historical cost is more prudent and conservative than FV.
2) Revaluation is not free.

(17-04-2015, 11:07 PM)Nuthing03 Wrote: 1) Historical cost is more prudent and conservative than FV.
2) Revaluation is not free.

1. True
2. True, but they still paid for it every years.

I think someone had raised this question to the AGM as to why the company continuously showing net book value of its property in the balance sheet despite they have done valuation of which the value is stated in the notes.

The Chairman gave a very PC answer. He said "We are in an electronic business, and not in property business. Why should we use F/V approach".

Hi Giraffe

Strange that the Chairman said this way. If true that PM is not a property counter, then why they still keep paying for the revaluation? Is it by law that every company must revalue its properties?

Btw I like your blog posted in H/W forum. Keep it up buddy!

The property is good as an asset backing which provides income and company does not need to pay rent for office space saving on rental overhead.

The financial report is also very simple, with just simple standard items and unlikely to be wrongly/fradulently reported by any accounting company big or small.

Fair value or not for properties should not be such a concern as the value will be there. Most importantly, for such a small cap, is that property asset + the cash of 50% per share provides reassurance that come another financial crisis, it won't face danger of going kaput, unlike other overleveraged company.

In the end its just a matter of waiting, for OPMI who wanna invest, for either a rebound in business(pretty unlikely) or a realization of asset value by some sales or further investment using available cash pile.

Do note in last report, other than cash of 16m+, the other major non-current asset is 19.5m property(yielding 3.9%) and 8.6m investment securities(yielding 5%+). The current distributorship side business is running at breakeven. There is no debt on balance sheet.

Market cap stands at 31m now so buying P.D could be seen as paying for an investment portfolio of property and shares yielding about 4%+ with a side of free cash. Plenty of margin of safety. If you looking for growth then look elsewhere.

Dividend yield (now 5.5%) has historical stability and though arguably not completely sustainable if we extrapolate the earnings from first half, there is still plenty of cash to distribute over next few years until distribution business picks up, or management could redeploy the cash during market downturn for more dividend income. There is no need for a cut in dividend as the company has good yielding property and securities as mentioned above contributing to the bulk of the payout.

P.D may not be in the property business as management claims but it definitely is looking more and more like an investment holding company now


-v-

Thanks hh488 simple words like "Keep it up buddy!" will put a smile on my face.
It's not by S'pore Financial Reporting Standard to conduct fair value analysis on its Investment Property(FRS40), they have a choice to use Cost Model or Fair Valuation.
In this case they use Cost Model but have done F/V analysis of which stated in the Notes.

BlueKelah you just nail it down! Hope you don't mind I use some of your findings in my blog





FRS40 http://www.assb.gov.sg/docs/attachments/...0_2014.pdf