Miyoshi Limited

This has been one very interesting company to own. I have been unable to find a single active thread on Miyoshi on any of the popular stock investing sites and so decided to start this discussion.

Well the interesting part is that Miyoshi was traded at $0.022 on the 4th Aug 2016 and today (9th March 2017) it touched a high of $0.078 as of writing this post. That is a more than a THREE-FOLD jump in price in 7 months!!! Must be one of the most impressive performers on the SGX as of today. 

If we go through their operating performance, Miyoshi has been a turnaround story. The pertinent numbers for FY16 (Year ended 31Aug2016):

Revenue: $49.239 mil (This is a drop from $54.408 mil achieved in FY15)
Net Profit: $1.153 mil (vs. $0.546 mil in FY15)
No. of shares: 452.67 mil
EPS: $0.0025 (for 2016)
NAV: $0.1211
Current Assets - Total liabilities: $10.451 mil
Cash on hand: $12.422 mil
Short term debt: $6.241 mil
Long term debt: $5.009 mil
Current market cap: $29.88 mil (Based on yesterday's closing price of $0.066)

I feel that the current activity cannot be completely justified based on the improvement in their operating performance. It gives a feel that there may be certain corporate developments underway that have resulted in this substantial and sudden increase in interest!

The other reasoning is that this is one of those micro-caps undergoing the rotational trading that affects them once in a blue moon. Till there is a corporate announcement from the company I guess it will be more of a wait and watch game. The other point of interest to be noted would be that there were some share purchases by the CEO when the price was in the $0.03 range and recently there were certain share buybacks by the company as well. These could be a pointer to what may be happening behind the scenes or may just be normal corporate actions without too much to be read into them.

I would appreciate if fellow forumers have any insights to offer!

(09-03-2017, 10:14 AM)sgmystique Wrote: This has been one very interesting company to own. I have been unable to find a single active thread on Miyoshi on any of the popular stock investing sites and so decided to start this discussion.

Well the interesting part is that Miyoshi was traded at $0.022 on the 4th Aug 2016 and today (9th March 2017) it touched a high of $0.078 as of writing this post. That is a more than a THREE-FOLD jump in price in 7 months!!! Must be one of the most impressive performers on the SGX as of today. 

If we go through their operating performance, Miyoshi has been a turnaround story. The pertinent numbers for FY16 (Year ended 31Aug2016):

Revenue: $49.239 mil (This is a drop from $54.408 mil achieved in FY15)
Net Profit: $1.153 mil (vs. $0.546 mil in FY15)
No. of shares: 452.67 mil
EPS: $0.0025 (for 2016)
NAV: $0.1211
Current Assets - Total liabilities: $10.451 mil
Cash on hand: $12.422 mil
Short term debt: $6.241 mil
Long term debt: $5.009 mil
Current market cap: $29.88 mil (Based on yesterday's closing price of $0.066)

I feel that the current activity cannot be completely justified based on the improvement in their operating performance. It gives a feel that there may be certain corporate developments underway that have resulted in this substantial and sudden increase in interest!

The other reasoning is that this is one of those micro-caps undergoing the rotational trading that affects them once in a blue moon. Till there is a corporate announcement from the company I guess it will be more of a wait and watch game. The other point of interest to be noted would be that there were some share purchases by the CEO when the price was in the $0.03 range and recently there were certain share buybacks by the company as well. These could be a pointer to what may be happening behind the scenes or may just be normal corporate actions without too much to be read into them.

I would appreciate if fellow forumers have any insights to offer!

Good job on your value pick

IIRC it was one of the classic net net counters which was less than 50c on the dollar. The balance sheet was strengthened quite well when they disposed of giken sakata couple years back, share price was also more than 5c at that time.

However the business seems to be still in decline and profit of 1.1m out of a declining revenue of 49m+ is not really that impressive, could dip back into loss anytime.

looks like this cigarette butt was worth a puff after all lol 

My guess is recent market speculation on privatisation and M&A.. So far we have had the finance companies go up from the regulation changes. 
Also some privatisation in the small cap space so anything with privatisation potential seems to have heavy buying interest.. 

-on radar-

(09-03-2017, 12:38 PM)BlueKelah Wrote:

(09-03-2017, 10:14 AM)sgmystique Wrote: This has been one very interesting company to own. I have been unable to find a single active thread on Miyoshi on any of the popular stock investing sites and so decided to start this discussion.

Well the interesting part is that Miyoshi was traded at $0.022 on the 4th Aug 2016 and today (9th March 2017) it touched a high of $0.078 as of writing this post. That is a more than a THREE-FOLD jump in price in 7 months!!! Must be one of the most impressive performers on the SGX as of today. 

If we go through their operating performance, Miyoshi has been a turnaround story. The pertinent numbers for FY16 (Year ended 31Aug2016):

Revenue: $49.239 mil (This is a drop from $54.408 mil achieved in FY15)
Net Profit: $1.153 mil (vs. $0.546 mil in FY15)
No. of shares: 452.67 mil
EPS: $0.0025 (for 2016)
NAV: $0.1211
Current Assets - Total liabilities: $10.451 mil
Cash on hand: $12.422 mil
Short term debt: $6.241 mil
Long term debt: $5.009 mil
Current market cap: $29.88 mil (Based on yesterday's closing price of $0.066)

I feel that the current activity cannot be completely justified based on the improvement in their operating performance. It gives a feel that there may be certain corporate developments underway that have resulted in this substantial and sudden increase in interest!

The other reasoning is that this is one of those micro-caps undergoing the rotational trading that affects them once in a blue moon. Till there is a corporate announcement from the company I guess it will be more of a wait and watch game. The other point of interest to be noted would be that there were some share purchases by the CEO when the price was in the $0.03 range and recently there were certain share buybacks by the company as well. These could be a pointer to what may be happening behind the scenes or may just be normal corporate actions without too much to be read into them.

I would appreciate if fellow forumers have any insights to offer!

Good job on your value pick

IIRC it was one of the classic net net counters which was less than 50c on the dollar. The balance sheet was strengthened quite well when they disposed of giken sakata couple years back, share price was also more than 5c at that time.

However the business seems to be still in decline and profit of 1.1m out of a declining revenue of 49m+ is not really that impressive, could dip back into loss anytime.

looks like this cigarette butt was worth a puff after all lol 

My guess is recent market speculation on privatisation and M&A.. So far we have had the finance companies go up from the regulation changes. 
Also some privatisation in the small cap space so anything with privatisation potential seems to have heavy buying interest.. 

-on radar-

Am not very sure about the privatisation angle, since the promoters do not have that high a stake to begin with:

Mr. Andrew Sin + Ms. Pek Yew Chee (Spouse): 18.19 + 6.91 = 25.1%
Mr. Pek Ee Perh, Thomas (Non-Independent Director): 3.52% (Am assuming he might be related to Ms. Pek Yew Chee)
Miyoshi Industry Co., Ltd: 15.36%

It would perhaps make more sense for a bigger player to take over Miyoshi for their Integrated Engineering Services division consisting of:

1) Precision Stamping
2) Prototyping
3) Metal Finishing
4) Automation

Anyways, that's enough of conjecture for the day. Need to enjoy the ride while we can  

I was just looking at this counter. Normally this does not fall within my radar as there is nothing outstanding about this and the liquidity is really really really bad on this one. Extremely difficult to accumulate meaningful stake. Also I believe hard disk components is one of their key products and there is a shift to flash/solid state drive which means one of their key product is in a declining market.

But the dividend is very decent and share price is quite heavily discounted at the moment. Good candidate for a short term play. In the mid-long term, hard to see where this is going. Some of the plastic molders probably have better moats, but have run up significantly.

About being taken over, Yes and No. I doubt any company would buy them over for their competence. It is a very ordinary precision stamping company with a few fringe business. It is highly unlikely they are the missing jigsaw piece from a larger Contract Manufacturer like Venture, Jabil, Flextronics or Foxconn, it is just not a critical part of the business. Better to take over Fischer tech than Miyoshi.

There is a higher chance of some private equity fund( who totally does not understand the insides of these manufacturing business) buying it over. Reason: Cheap.

(09-03-2017, 04:40 PM)Big Toe Wrote: I was just looking at this counter. Normally this does not fall within my radar as there is nothing outstanding about this and the liquidity is really really really bad on this one. Extremely difficult to accumulate meaningful stake. Also I believe hard disk components is one of their key products and there is a shift to flash/solid state drive which means one of their key product is in a declining market.  

But the dividend is very decent and share price is quite heavily discounted at the moment. Good candidate for a short term play. In the mid-long term, hard to see where this is going. Some of the plastic molders probably have better moats, but have run up significantly.

About being taken over, Yes and No. I doubt any company would buy them over for their competence. It is a very ordinary precision stamping company with a few fringe business. It is highly unlikely they are the missing jigsaw piece from a larger Contract Manufacturer like Venture, Jabil, Flextronics or Foxconn, it is just not a critical part of the business. Better to take over Fischer tech than Miyoshi.

There is a higher chance of some private equity fund( who totally does not understand the insides of these manufacturing business) buying it over. Reason: Cheap.

Seems like the market is unlocking some kind of hidden value in Miyoshi.  The stock has been on a consistent uptrend for the last couple of weeks with the price touching a multi-year high of $0.087 today (as of writing) and all this has been with decent volumes. There has been no perceptible improvement in their performance as of their 1Q17 results. Maybe HY17 results would be an eye-opener!

I have been happy to keep selling on a gradual basis all this while, thankfully at higher prices! Have now recovered more than my initial investment in Miyoshi. Thanks to BlueKelah for giving this simple yet very effective suggestion of making sure that we recover the initial capital invested and LET THE FREE SHARES RIDE

(30-03-2017, 10:24 AM)sgmystique Wrote: Seems like the market is unlocking some kind of hidden value in Miyoshi.  The stock has been on a consistent uptrend for the last couple of weeks with the price touching a multi-year high of $0.087 today (as of writing) and all this has been with decent volumes. There has been no perceptible improvement in their performance as of their 1Q17 results. Maybe HY17 results would be an eye-opener!

I have been happy to keep selling on a gradual basis all this while, thankfully at higher prices! Have now recovered more than my initial investment in Miyoshi. Thanks to BlueKelah for giving this simple yet very effective suggestion of making sure that we recover the initial capital invested and LET THE FREE SHARES RIDE

I actually don't agree with this. "Free shares" make us take risk more than anything else, blurring the judgement. If the fundamentals or valuations are wrong, the cost doesn't matter - this means fundamentals/valuations are the main basis/consideration for buy/sell, not cost.

The same psychological heuristic that let the free share ride, is also the same rootcause that let us unwilling to cut loss.

(30-03-2017, 10:58 AM)weijian Wrote:

(30-03-2017, 10:24 AM)sgmystique Wrote: Seems like the market is unlocking some kind of hidden value in Miyoshi.  The stock has been on a consistent uptrend for the last couple of weeks with the price touching a multi-year high of $0.087 today (as of writing) and all this has been with decent volumes. There has been no perceptible improvement in their performance as of their 1Q17 results. Maybe HY17 results would be an eye-opener!

I have been happy to keep selling on a gradual basis all this while, thankfully at higher prices! Have now recovered more than my initial investment in Miyoshi. Thanks to BlueKelah for giving this simple yet very effective suggestion of making sure that we recover the initial capital invested and LET THE FREE SHARES RIDE

I actually don't agree with this. "Free shares" make us take risk more than anything else, blurring the judgement. If the fundamentals or valuations are wrong, the cost doesn't matter - this means fundamentals/valuations are the main basis/consideration for buy/sell, not cost.

The same psychological heuristic that let the free share ride, is also the same rootcause that let us unwilling to cut loss.

Well maybe I shall clarify that this makes sense when you no longer feel that the undervaluation you had perceived at the point of purchase holds true any longer. I would not mind letting my profits run as long as I am confident about the fundamentals of my holdings no matter the amount of paper profit that I may be making!

I have been adding to my positions for certain companies even when the share price has almost doubled from my initial purchase price as long as I see that they are able to maintain/ improve operating performance and the relative undervaluation still holds. Of course I would be more than willing to sell (even at a loss!) if I see operating performace start going down due to X/Y/Z reasons.

Hope this adds some more clarity to my thought process 

(30-03-2017, 10:58 AM)weijian Wrote:

(30-03-2017, 10:24 AM)sgmystique Wrote: Seems like the market is unlocking some kind of hidden value in Miyoshi.  The stock has been on a consistent uptrend for the last couple of weeks with the price touching a multi-year high of $0.087 today (as of writing) and all this has been with decent volumes. There has been no perceptible improvement in their performance as of their 1Q17 results. Maybe HY17 results would be an eye-opener!

I have been happy to keep selling on a gradual basis all this while, thankfully at higher prices! Have now recovered more than my initial investment in Miyoshi. Thanks to BlueKelah for giving this simple yet very effective suggestion of making sure that we recover the initial capital invested and LET THE FREE SHARES RIDE

I actually don't agree with this. "Free shares" make us take risk more than anything else, blurring the judgement. If the fundamentals or valuations are wrong, the cost doesn't matter - this means fundamentals/valuations are the main basis/consideration for buy/sell, not cost.

The same psychological heuristic that let the free share ride, is also the same rootcause that let us unwilling to cut loss.

Actually in long term investing we look at how long it takes for us to recover our capital. That is why cashflow back to investor is so important. They actually look at payback period for ships, buildings, etc rather than IRR, ROIC, yield etc. The payback period that my lecturer explained in 5 minutes turned out to be an anchor concept for value investors

I am not sure if sometimes, we can see through our own heuristic biases? If we could have easily seen through it, then it wouldn't be called a "bias", isnt it?

hi sgmystique,
I don't doubt that "a bird in the hand, is better than 2 in the bush" - i have personally experienced highly profitable positions turned loss making eventually (S chips and O&G).

But i do find that many OPMIs are more than frequent caught up by "free shares", to our own detriment. I do observe that OPMIs sell down their profitable positions and the remaining shares become "free of cost", and (mentally) compartmentalized from their own capital. Since this is "free money" now, there is a tendency to treat this more frivolously - in the sense that when fundamentals really change and the right action is to sell, loss aversion is less intense because it is free, resulting in the right action not be taken.

I don't have doubt in your decision making process, just a point to make on the dangers (that i perceive) on the "free share portion". As for your loss cutting, it is inspiring to see that you have progressed over the last few years since the FF saga.

my thoughts on "free shares".

1. Much like there is no free money, shares are actually not free, it is real money/real profit earned from a position/a risk taken that went well.
2. Exit for 2 reasons, the fundamentals have changed or your have set a target(fair value) and the target has been reached.
3. I do like the capital preservation/cashflow part, which is the first part of 'free shares ride' strategy.