LHT Holdings

Interesting and pleasing to see LHT's share price increase > 9% to S$ 0.132 in SGX trading today. And the volume was not-too-shabby - by LHT standards - a total of 147,000 LHT shares were traded. This was achieved in a generally declining market, including for small caps. I wonder if expectations are rising vis-a-vis LHT's forthcoming 1H 2012 results announcement? Or is LHT's 15-year Woodchips Purchase Agreement with TP Utilities about to be triggered and start generating additional revenues?

At today's closing price, LHT's share price now stands at a discount of ~ 27% to NAV/share. LHT's shares have had a quiet 7-8 weeks, trading in the low S$ 0.120's, with no recent purchases by Executive Director Yap disclosed to the market. Interesting.

Vested

I tink it is due to straits times today.

There was this feature in the papers today.


Turning waste wood into winning technology (Link to full article here)

LHT Holdings took plunge with SGX listing, scored with recycled wood. In the last of our four-part series on recently listed SMEs, we feature a company whose search for raw materials to beat rising costs led to a high-tech solution.

THE phrase "waste not, want not" aptly applies to LHT Holdings, which turns leftover wood into a steady source of cash.

The company, which makes the familiar wooden pallets used for transporting goods, was set up in 1977 with nine shareholders and start-up capital of $33,000.

It depended largely on Malaysia and Indonesia for wood to make the pallets but prices were escalating and fluctuating too much, said LHT executive director May Yap.

It was also costing the firm $600,000 a year to dispose of unwanted timber.

As Ms Yap puts it: "At that moment we were very simple minded; we thought if we can create our own raw material, we would be the winners."

...

Last year, LHT's net profit was $7.35 million, up 133.7 per cent from $3.14 million in 2010.

Mr Yeo says a listing is a good business platform for expansion, bringing visibility and credibility.

After LHT joined the SGX, it began to attract more overseas business, including clients from India, South Korea and the Philippines.

Last year, LHT, which employs about 180 people, established a subsidiary in Tianjin, with a registered capital of US$3 million (S$3.7 million), mainly for research into energy-saving technologies and to develop environmentally friendly wood products.

"People are more aware of our company and in countries such as China, they do have a preference to work with listed companies," he said.

LHT is also due to announce its 1H (ended 30Jun12)-FY12 results by 14Aug12. Perhaps it is timely to revisit its FY11's results and AR.....
http://info.sgx.com/webcoranncatth.nsf/V...E004C3AF7/$file/LHT-Holdings-Ltd-31Dec11-Full-Year-Results-FINAL.pdf?openelement [FY11 results announcement]
http://info.sgx.com/listprosp.nsf/07aed3...e000ed2de/$FILE/LHT_AR2011(SGX).pdf [FY11 AR]

Assuming the 1H results are positive, what are the chances that Mr Market would re-rate LHT upwards further, perhaps all the way towards its NAV/share, which already stood at $0.1797 as at 31Dec11?

LHT reported out their 1H 2012 financials yesterday evening. Earlier than I had thought they would (my mistake). Slightly disappointing results but this followed a stellar (in my view) 2011 and it is pleasing to see LHT's business demonstrate robustness in tougher times. My take, in the form of three positives and three not-so-positives………………...

+ve: Despite increases in the costs of raw materials and higher overheads, LHT’s gross profit margin was maintained at the ~ 25% level – there was a tiny “within-the-noise” reduction in margin.
+ve: Cash increased by 12% to ~ S$ 7.5 Million – LHT’s management used the net cash inflow generated from operations to purchase plant and equipment and pay the FY 2011 dividend.
+ve: NAV/share increased ~ 2% to S$ 0.1843. At Fridays closing share price of S$ 0.118 this means LHT shares are currently trading at a ~ 36% discount to NAV. Surely room for some share price appreciation?

-ve: Revenues for 1H 2012 were down ~ 5% to as compared to 1H 2011. LHT attribute this to the general slow-down of the global economy. NIAT declined ~ 8% to just above S$ 2 Million.
-ve: Biggest downer in % terms was the Technical Wood division, where revenues decreased by ~ 25%: demand declined. Management talks to the challenge of securing wider public acceptability of Technical Wood. LHT's main Pallets & Packaging division had ~ 4% lower revenues.
-ve: Costs: a) In Section 10, LHT talk to global challenges of rising raw material costs, fuel costs and labour costs remaining the key challenges to LHT’s cost base; b) Admin expenses increased by ~ 16% in 1H 2012 as compared to 1H HY2011, due to higher salaries and rental expenses.

There is no mention of LHT's 15-year Woodchips Purchase Agreement with TP Utilities and when this should hopefully start generating additional revenues. And no mention of the Tianjin business – early days I presume. Debts remain low (d/e ~ 13%) and the interest charge burden is minor (~ 2.4% p.a. interest).

The way I look at it is…….. if these results were duplicated in 2H 2012 then LHT - at its current share price - would be trading on a P/E of ~ 6 and this is without any upsides from the TP Utilities deal (and LHT’s fledgling PRC business)………….. and at ~ 36% discount to NAV. I’m more than comfortable with that.

Vested

Just finished reviewing the 1H results.....
http://info.sgx.com/webcoranncatth.nsf/V...6003B25C3/$file/LHT-Holdings-Limited-Half-Year-Results-30June2012-FINAL.pdf?openelement

I guess the slight drop in 1H's business volume/Revenue and NP is understandable, bearing in mind the demand for wooden pallets is mainly derived from trade - in LHT's case, mainly from Singapore's exports and domestic distribution/logistics activities. Understandably, the slowed EU economies in the last 12 months would have reduced exports/re-exports from Singapore. Thank goodness LHT also has 3 other smaller revenue streams (reflected under "Other Income") - waste collection income; heat treatment & utilities income; and rental & service income - which have all registered small increases.

With the latest (30Jun12) B/S carrying productive/income-generating assets and a net cash reserve of approx. $4.9m (equivalent to $0.023/share) - giving a NAV/share of $0.1843 - and a projected current-year EPS of approx. $0.019, rationatally speaking there is little valid reason why LHT should be traded at the last done price of only $0.118, especially a Final dividend for FY12 (Note: FY11's Final dividend was $0.005/share) would be coming in a couple of months' time.

What happened today?

Thank you for your one-liner question of earlier this evening Kelvin,

So ............ as regards LHT's shares and its share price "evolution" today ...........

1. On a personal basis..............

1a. I added 65,000 shares to my already vested position in LHT.

1b. Why did I do this? Because for some reason or reasons, a seller or perhaps sellers, dropped into the market a series of 10,000 LHT share bundles at a consistent offer price of S$ 0.105, i.e. at a ~ 12% discount to yesterday's closing price.

1c. Before buying....... I looked for any SGX disclosures made my LHT - was there a reason an eventual 145,000 shares were traded on the SGX at a lowly S$ 0.105 per share? There was and is no publicly stated reason that I could or can find.

1d. I tried to pick up more LHT units than my humble 65,000 acquisition ....... someone else picked up the other 80,000 units traded today - I wasn't sufficiently nimble-footed - and I suspect the other buyer(s) will feel pleased. I note that at today's closing there were buy bids at the S$ 0.109 level (30,000 shares), S$ 0.106 level (30,000 shars) and S$ 0.105 (143,000 shares - including a failed bid from yours truly). May be I am not alone in thinking LHT shares were being trading at bargain prices today?

2. May be the seller or sellers know something I don't ............ likely they are smarter than I am. But I believe LHT is seriously good value at S$ 0.105 per share........ so I bought. LHT is a well managed, non-fanciful serious little company with a couple of appealing upsides ........... and if its second half results duplicate its first half results...... at today's closing price, LHT is trading at a modest P/E of ~ 5.5. Shares of this very tightly held stock are darn difficult to come by at the best of times.

VB Forummers ............ what am I missing here?

Vested ............. a tad more so today than I was yesterday. Have a nice evening.

(16-08-2012, 07:50 PM)Kelvin Wrote: What happened today?

previously vested.
also grab a few lots today. feel pleased...

all the way back up!