Spindex Industries

We mustn't forget that the rather sharp depreciation of the USD vs. SGD - which slided from the closing rate of 1.3934 on 30Jun10, to the closing of 1.2834 on 31Dec10.....
http://finance.yahoo.com/echarts?s=USDSG...=undefined
- exerted a certain negative impact on Spindex's reported SGD-denominated revenue in H1 (ended 31Dec10)-FY11. As most of Spindex's sales to and revenue derived from its mostly MNC customers are denominated in USD, I suppose it is reasonable to believe that the actual increase in business volume and revenue as measured in USD for H1-FY11 should be quite a lot higher than the 1% y-o-y increase reported.

Of course, if the USD had instead stayed stable relative to SGD and other Asian currencies - which Spindex, through having local manufacturing facilities in Malaysia, PRC and Vietnam, is exposed to - Spindex's OP and PBT for H1-FY11 would naturally have been a lot higher than what has been reported - OP: $2.354m; PBT: 1.785m.

To counter this negative trend, I guess we can reasonably expect Spindex's management to take corrective measures, including raising selling prices. Of course, if the current slow U.S. economic receovery takes hold in the coming months and the USD rebounds, the whole scenerio for Spindex's business and profitability will change for the better.

Closed 29.5c (down 5.5c, 15.7%) yesterday. I think the market over-reacted.

(12-02-2011, 09:41 AM)starbugs Wrote: Closed 29.5c (down 5.5c, 15.7%) yesterday. I think the market over-reacted.

At $0.295, and based on the 115.365m issued shares, Spindex's market cap. is now only $34.03m.

When compared against the group's revenue base of $82.0m a year, and equity of $55.5m (i.e. NAV: $0.481/share) and nett cash of $16.44m (i.e. Nett Cash: $0.143/share) as at 31Dec10, Spindex as a well-established and profitable business remains grossly under-priced by Mr Market.

I suppose unfavourable foreign exchange movement in the short-term should not permanently weaken or change the economics or viability of Spindex's business in the longer term.

Archrival Innovalues has just released its FY10 (ended 31Dec10) full-year results.....
http://info.sgx.com/webcoranncatth.nsf/V...F00419691/$file/Innovalues_4Q10.pdf?openelement
While Innovalues managed to achieve a profit turnaround in FY10 and recorded a full-year NP of $1.317m (vs. a net loss of $4.266m in FY09), in H2 (Jul-Dec10) the business actually again slided back into the red to the tune of $0.754m in net losses, on a revenue of $48.269m.

When compare the above with Spindex's H1 (Jul-Dec10)-FY11's performance.....
http://info.sgx.com/webcoranncatth.nsf/V...penelement
, Spindex has done much better in the same period, having posted a NP of $1.785m, on a revenue of $41.07m.

A quick comparison of the 2 companies' B/S will show Spindex - having a large nett cash reserve of $16.44m (equivalent to approx. $0.143/share) as at 31Dec10 - is financially much strong than Innovalues, which was still saddled with a large nett debt of $21.786m as at 31Dec10.

The 2 are in the same industry, but clearly their fate and fortunes differ. The defining factors here have to be management quality and financial prudence.

There seems to be some serious selling of Spindex stock. Somebody seems to want to unload quiet a fair bit at S$0.285. Any further deterioration in the company's fundamentals...we will have to wait and watch...

(19-04-2011, 05:32 PM)sgmystique Wrote: There seems to be some serious selling of Spindex stock. Somebody seems to want to unload quiet a fair bit at S$0.285. Any further deterioration in the company's fundamentals...we will have to wait and watch...

Is something seriously wrong with Spindex. The stock closed at a 52 week low of S$0.24 today. That values the company at just about S$27 mil. with around S$17 mil of net cash.

(05-05-2011, 05:56 PM)sgmystique Wrote: Is something seriously wrong with Spindex. The stock closed at a 52 week low of S$0.24 today. That values the company at just about S$27 mil. with around S$17 mil of net cash.

I was just going to add.
Spindex at current price is being valued by Mr. Market at:
-P/E: 4.5
-10 Yr P/E: 6.1

So what's up with Spindex?
No debt. I suspect in the near-term (i.e. 6-mths, 1yr), they are facing some headwinds. With the continued depreciation of the USD, I think the FX losses from 1H11 is going to continue. The Mar 11 Japan earthquake is probably going to affect their automotive segment. Expect a drop in earnings in FY11.

Is there anything fundamentally different in their business? Are insiders getting out? These will probably be the key things to look out for.

Note: I took a quick look at Spindex's price history. It seems that the market has attached a P/E of 10 to Spindex for the better part of the time. Draw your own conclusions.

(05-05-2011, 05:56 PM)sgmystique Wrote: Is something seriously wrong with Spindex. The stock closed at a 52 week low of S$0.24 today. That values the company at just about S$27 mil. with around S$17 mil of net cash.

Only 175 lots done - the selling likely by 1 or 2 loose-footed shareholders in need of money in a hurry.

As suggested by the H1 results, Spindex's operating profits and equity in FY11 (ending 30Jun11) will be subject to an 'attack' by the weakened USD (vs. SGD), on top of a smaller squeeze in GP margin from higher raw material prices.

The business, however, should remain profitable overall and continue to generate positive FCF.

A New York based privately-owned, value-focussed hedge fund, SC Fundamental LLC, and its President, Peter M. Collery, have taken a combined 5.19% stake in Spindex.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

Some background info on SC Fundamental LLC and Peter M. Collery....
http://investing.businessweek.com/resear...Id=4550084
http://www.nytimes.com/1985/09/09/style/...llery.html

Spindex should be announcing their full year result ended June 2011 by this evening. Based on the current price of $0.255, its price to book is around 0.53.
I'm expecting the company to announce dividend of at least 1.3 cents!! Keep my finger cross!

The following is some of the financial information ended 1H Dec 2010.

1HFY2011
Total equity (S$ '000) $55,495.00
Total Number of Shares ('000) 115,365.00
NAV (S$) $0.4810

Cash (S$ '000) $18,213.00
Cash Per Shares(S$ '000) $0.1579

Total Debt $1,773.00
Debt / Equity 0.03
Debt - Cash $16,440.00
Net Cash per shares $0.14

Total Current Asset $47,891.00
Total Current Libilities $18,816.00
Total Long term Liabilities $714.00
Total Current Asset $28,361.00
Net Current Asset Per Share $0.25

1H 2011 Forward statement:
Changing business conditions are likely to persist in 2H FY2011. The Group will continue to monitor market developments closely so that appropriate measures can be implemented promptly to mitigate any adverse impact on its operations.
The Group’s emphasis on diversifying its revenue base has been met with some success. The Group remains committed to its customer-centric strategy and will work closely with its customers to manage their inventories following a period of restocking in 2H FY2010.
The Group will continue to focus on expanding market share with existing customers and selectively acquiring new customers. Besides actively marketing to potential new customers, the Group has also been enhancing its manufacturing capabilities by upgrading the skills of its workforce and investing in new equipment.