Portek International

i was doing a brief read-through of their released financials

1. exchange rate fluctuations: SGD is highly likely to further appreciate against USD, EUR and the dinar that Portek earns. Although it wasn't a big problem in the latest results, this might worsen going forward.

2. port throughput grew only minimally in the half year (the inc was about 2000 TEU). Portek explains that most ports (with exception of one in Indonesia) experience growth but the decrease in throughput at the Indonesia port dragged down overall figures. I am no expert in terminal operations but it seems worrying that y-on-y increase is only 0.5% in developing ports.

Taking advantage of the depressed market today (15Feb11) and some loose-footed shareholders who turned sellers, Chairman/MD Larry Lam added another 100 lots and paid $0.525/share.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
With this purchase, Lam now owns a direct personal stake of 23.97% in Portek's issued equity shares.

(15-02-2011, 06:05 PM)dydx Wrote: Taking advantage of the depressed market today (15Feb11) and some loose-footed shareholders who turned sellers, Chairman/MD Larry Lam added another 100 lots and paid $0.525/share.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
With this purchase, Lam now owns a direct personal stake of 23.97% in Portek's issued equity shares.

Portek has done S'pore proud.
It manages ports that were previously state-run, introducing automation and mechanisation, improving work flow etc.
Host countries benefit from speedier cargo movements, which lower the costs of trades.
The fact that it is now operating terminals profitably in four countries, and is in the running for operating terminals in Russia, speak vol of its competence.

Has anyone looked into the prospectus of the soon-to-be-listed HPH Trust and is able to share the relative valuation of HPH's port assets based on the usual valuation yardsticks, like P/B, PER, or Price-to-Cash-Flow Ratio? I thought it will be useful to use HPH's IPO valuation yardsticks to compare with Portek's current market valuation.

Based on the last done share price of $0.55, and the 147.889m outstanding issued shares, Portek's current market cap. of only $81.34m is clearly a grossly under-priced situation, especially when using the Price-to-Cash-Flow Ratio as yardstick. IMHO, Portek should be worth at least 1x more!

dydx-san,

agree that Portek is a true gem. But we do need to consider the political risks in countries that Portek is operating in. Wonder whether we should consider applying a discount to it?

Portek has got an advantage in the sense that they are not eyeing the key ports that big boys like Hutchison, P&O or PSA are fighting over but rather the secondary ports. I've no doubts that they are treating the shareholders decently, but in terms of expansion, it does seem a little too slow for my liking.

*Vested*

Sometimes, politics in a democratic country/society can be changed in just one election, leading to a changed/new government pushing radically different economic/social policies. However, it doesn't mean that foreign investors in the country will suddenly lose everything. The fact remains governments and their leaders are expected to conduct their business by abiding to international norms, standards, and laws.

And the countries Portek has invested in so far are not like a Libya, where the risk of a major social unrest (or more like a civil war now!) is obviously very high and to a large extent discernible in advance.

For Portek to add new port operation in another LDC, Chairman Larry Lam as the largest shareholder is also betting a share of his own and family's wealth. So he ought to be careful and prudent, especially if the amount involved is large in relation to Portek's financial resoures. It is very different to the case of a PSA, where to drive business growth overseas, the senior managers there - possibly also directed by a mandate from our political leaders - are betting based on PSA's own large financial resources - perhaps even beyond that as Temasek and ultimately the Government of Singapore is their sole shareholder. Mistakes made in such ventures are usually not easily discernible by outsiders.

Since I can't invest in PSA, I am happy to simply put some money in a well-established private enterprise which is conservatively managed by a owner-manager with his own risk/benefit in mind.

(08-03-2011, 01:28 PM)dydx Wrote: Has anyone looked into the prospectus of the soon-to-be-listed HPH Trust and is able to share the relative valuation of HPH's port assets based on the usual valuation yardsticks, like P/B, PER, or Price-to-Cash-Flow Ratio? I thought it will be useful to use HPH's IPO valuation yardsticks to compare with Portek's current market valuation.

Based on the last done share price of $0.55, and the 147.889m outstanding issued shares, Portek's current market cap. of only $81.34m is clearly a grossly under-priced situation, especially when using the Price-to-Cash-Flow Ratio as yardstick. IMHO, Portek should be worth at least 1x more!

Comparison between Portek and HPH Trust is given below:
************************* Portek********* HPH Trust
(A) No of shares/units******** 147 million*******8.7 billion
(B) Equity***************** $68 million*******HK$73 billion
© Latest attributable profit**** $12.6 million**** HK$2.13 billion
(D) Earnings per share/unit***** 8.5 c**********HK 24.5c
(E) Price as a mutiple of (D)*****6 (at 56C)***** 29(at US91c)(
(F) = © + non-cash expenses***$20 million******HK$4.9 billion
(G) Price as a multiple of (F)*****4.4**********12.6

It is reasonable for Portek to trade at a discount given that it is smaller and has shorter track records.
But why is the discount so deep? Does the discount reflect the risk of turmoils in North Africa spreading to Algeria where Portek is operating a port? It will be worthwhile to find out in what ways is the political landscape different from those of Tunisia, Libya and Egypt.

PURCHASE OF OFFICE PREMISES
1.
Introduction
The Board of Directors of Portek International Limited (the “Company” or the “Group”) wishes to announce that on 17 March 2011, the Company has signed a Sales and Purchase Agreement for the purchase of Unit No : #02-01 to #02-06 of Westech Building at 237 Pandan Loop, Singapore 128424 (the “Property”).
2.
The Property
Westech Building is a 999-year leasehold property being developed by Techkon Investment Pte. Ltd. The total floor area of the 6 units is 12,324 square feet. The value of the Property is based on the valuation by the bank.
3.
Rationale for the acquisition
The Company, together with its Singapore-based subsidiaries, expects to occupy the new office premises from its existing rented premises upon completion of renovation works. The Board believes that the new office premise will provide ample space for the present and future needs of the Group, as well as rendering a conducive working environment for its staff in Singapore.
4.
Purchase consideration and source of funds
The total purchase price is S$ 7,050,000, 80% of which will be financed by a bank loan with the Property as its collateral. The remaining 20% will be financed through internally generated funds.

(18-03-2011, 09:30 PM)pianist Wrote: PURCHASE OF OFFICE PREMISES
1.
Introduction
The Board of Directors of Portek International Limited (the “Company” or the “Group”) wishes to announce that on 17 March 2011, the Company has signed a Sales and Purchase Agreement for the purchase of Unit No : #02-01 to #02-06 of Westech Building at 237 Pandan Loop, Singapore 128424 (the “Property”).
2.
The Property
Westech Building is a 999-year leasehold property being developed by Techkon Investment Pte. Ltd. The total floor area of the 6 units is 12,324 square feet. The value of the Property is based on the valuation by the bank.
3.
Rationale for the acquisition
The Company, together with its Singapore-based subsidiaries, expects to occupy the new office premises from its existing rented premises upon completion of renovation works. The Board believes that the new office premise will provide ample space for the present and future needs of the Group, as well as rendering a conducive working environment for its staff in Singapore.
4.
Purchase consideration and source of funds
The total purchase price is S$ 7,050,000, 80% of which will be financed by a bank loan with the Property as its collateral. The remaining 20% will be financed through internally generated funds.

The unit price of less than $600 per square foot seems low for 999 years lease.
Any view on the recent price breakout?

price breakout to 0.64 on 25 march..