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My apologies and thanks for the clarification. The CEO did buy back about half a million worth of shares in September at the market price of $0.375 via an off market transaction, and skimming the latest filings in December I missed the checked box indicating that the transaction was a result of 'Securities following conversion/exercise of rights, options, warrants or other convertibles'.
Following your reasoning, is it safe to say he thinks the shares are worth at the very least $0.375 instead of $0.31?
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Well, yeah, but you could also say that the substantial shareholder who sold his shares to the CEO *didn't* think the shares are worth more than $0.375.
In the end I think we need to have more reasons for buying shares other than the fact that insiders bought them.
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30-12-2016, 09:09 PM
(This post was last modified: 18-01-2017, 09:16 PM by bardsmanship.)
This is a pretty interesting company, IMO.
As of 3Q 2016 (the latest results), it has net cash of nearly 38c/share, which makes up 95% of the current share price (40c). What's more, the company has been profitable every single year since at least 2007, which is the earliest set of results I can find. Yes, even through the years of the financial crisis. By contrast, most other companies listed on the SGX that have such a significant net cash position relative to market cap, are loss-making. I find it odd that Mr. Market is valuing this profitable business at nearly nothing.
Management recently increased their stake in the Buylateral Group, a US-based supply chain company that distributes furniture to clients such as Walmart and Overstock.com. I consider this a good move since revenue and profit contributions from this part of the business is still rising.
I also like that management has been looking for ways to increase recurring income, e.g. through the new hotel business. The timing for this could have been better, but I take comfort from the fact that they went into this new venture with an experienced partner - Lian Huat Group, which has another hotel in Singapore and one more in China. I'll be happy if the ibis Styles at Macpherson can make a profit and be self-sustaining for now.
The challenges that lie ahead include:
1. Competition from online retailers. A big chunk of Nobel's revenue and profits come from distributing imported furniture. There are now many ecommerce companies in Singapore that do the same thing, such as HipVan, FortyTwo and Castlery. Further, management has mentioned that some of these competitors carry parallel imports, which are cheaper, thereby pressuring margins. That's part of the reason their revenue from the Interior & Furniture segment is on pace to decline 25% over the past 2 years.
2. The subdued housing market. The cooling measures put in place by the government has affected the sale of high-end homes especially hard. This is the other reason for the decline in revenue in the company's bread-and-butter retail business (selling luxury furniture), despite high new home completions in 2015 and 2016. Unfortunately I don't think there is much the company can do about headwinds like this.
3. Revenues from property development have already been substantially recognized, so this segment will probably not contribute much more in the coming quarters. They may also have to recognize further impairment losses on their property developments in the UK - fortunately the bigger one (Marine Wharf East) is nearly half-sold. Again, Brexit is obviously beyond management's control and came as a surprise to most, so I don't think this reflects badly on management.
There isn't much management can do about Brexit, the state of the local property market or the declining visitors to Singapore, so I expect they will focus their efforts on strengthening their online presence. The CEO mentioned in the 2015 annual reports that they will be looking to "take back the initiative from web-based furniture retailers", so it will be interesting to see how they go about doing that. Personally I think they still have work to do in this regard - some of their websites, like the ones for Marquis, SuMisura and Whiteboard, are either old or poorly designed and in need of a complete overhaul. Since their focus is on the luxury segment, their digital presence should reflect this. On the bright side, some of their other websites, like the ones for OM and Lifestorey, are actually pretty well-designed.
Management also mentioned in this year's quarterly reports that they are currently reviewing retail business operations with a view to streamline and consolidate. I wonder if this means they will be bringing their different brands under one roof (both physically and digitally)? They certainly carry enough brands that they could have a one-stop website for selling furniture, with a focus on the premium segment to differentiate themselves from competitors. A single website will be easier to promote and achieve a good search ranking.
I'm also not sure if there's anything stopping management from doing parallel importing like other online retailers. What are the benefits to being the official distributor?
In any case, I think the very strong net cash position offers downside protection for the time being while the company gets its retail business back on track. I don't see the share price declining much more from current levels, unless management does something silly to burn through its cash pile.
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18-01-2017, 06:08 PM
(This post was last modified: 18-01-2017, 06:33 PM by bardsmanship.)
The share price went up today on exceptionally high volume - 459,000 shares traded compared to the 3-month average of 14,515.
Is something brewing?
EDIT: Well, apparently the CEO acquired 409,000 shares today in an off-market transaction. I wonder who the other party was. Kind of surprised that the volumes of off-market transactions are included in Yahoo's volume computation.
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Request for Trading Halt : Pending release of announcement.
Specuvestor: Asset - Business - Structure.
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03-05-2017, 10:21 AM
(This post was last modified: 03-05-2017, 10:53 AM by bardsmanship.)
The offer is terrible, 51c for a company that has net cash of 40c per share as of 31 Mar 2017, and had earnings per share of 7c in FY 2016.
Backing out the net cash from the offer price, they basically only want to pay a P/E of 1.6 for Nobel's business.
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