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POWERMATIC DATA: ($0.18) Potential hidden value in overlooked network products distributor
11/07/2014, 1 hour ago
Powermatic Data surged to a new 52-week high of $0.185 today, usually an indication of mounting investor interest.
The distributor of networking products is a textbook deep value play, trading at 0.5x P/RNAV and offering a recurring 5.6% yield, based on a consistent dividend of 1¢ annually.
Key to Powermatic's valuation is its investment property - two adjoining six-storey freehold industrial buildings located at 7 & 9 Harrison Road. The properties are recorded at a book value of $18.7m, against a market valuation of $32.4m, more than Powermatic's entire market cap of $31.2m.
In addition, Powermatic holds the following key items on its balance sheet:
- cash of $17.5m ($0.10/share)
- financial assets of $7.1m ($0.04/share)
- no debt and minimal liabilities
From an asset-valuation standpoint, Powermatic could be worth an additional $0.14/share from current levels, implying ~78% upside.
As a possible catalyst, if Powermatic decides to adopt fair value accounting for its investment property in its FY14 results, the group may be able to record a tidy one-off gain (~$13.7m) and lift its stated NAV from the current $0.26/share to ~$0.34/share.
Key investment risks:
- Generally low trading liquidity
- Potential business obsolescence, due to the increasing popularity of online purchases by end users, and substitution from system-on-chip products.
By Ben Oh
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Ben Oh clearly does not know the company well! Powermatic excels in designing and providing wireless solutions and they are still serving many corporate customers. They serve more businesses than consumers like you and me. Increasing popularity of online purchases?
It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy. –George Lorimer
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11-07-2014, 10:23 PM
(This post was last modified: 11-07-2014, 10:27 PM by BlueKelah.)
Oh share price jump becoz of this Ben Oh report?? Thought it was due to the upcoming AGM and confirmation of the one cent div...
Anyways who is this Ben Oh Fellow ah??
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Hi Guys,
I have a newbie question. How do I know whether the property was recorded at book value or whether was there was re-valuation done on the property?
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This company bears very similar characteristics to Hupsteel, i.e. struggling core business (in a very competitive sector, IT or steel stockists , etc) but holding a rich reserve of land banks (i.e. freehold properties bought decades ago but reflected as NAV on book).
The problem is how long does one has to wait before the true value from land/properties revaluation is materialized. What impact will the current property decline (probably ongoing for next few years) have on the fair valuation of these counters with a reserve of land bank?
(11-07-2014, 05:30 PM)desmondxyz Wrote: POWERMATIC DATA: ($0.18) Potential hidden value in overlooked network products distributor
11/07/2014, 1 hour ago
Powermatic Data surged to a new 52-week high of $0.185 today, usually an indication of mounting investor interest.
The distributor of networking products is a textbook deep value play, trading at 0.5x P/RNAV and offering a recurring 5.6% yield, based on a consistent dividend of 1¢ annually.
Key to Powermatic's valuation is its investment property - two adjoining six-storey freehold industrial buildings located at 7 & 9 Harrison Road. The properties are recorded at a book value of $18.7m, against a market valuation of $32.4m, more than Powermatic's entire market cap of $31.2m.
In addition, Powermatic holds the following key items on its balance sheet:
- cash of $17.5m ($0.10/share)
- financial assets of $7.1m ($0.04/share)
- no debt and minimal liabilities
From an asset-valuation standpoint, Powermatic could be worth an additional $0.14/share from current levels, implying ~78% upside.
As a possible catalyst, if Powermatic decides to adopt fair value accounting for its investment property in its FY14 results, the group may be able to record a tidy one-off gain (~$13.7m) and lift its stated NAV from the current $0.26/share to ~$0.34/share.
Key investment risks:
- Generally low trading liquidity
- Potential business obsolescence, due to the increasing popularity of online purchases by end users, and substitution from system-on-chip products.
By Ben Oh
[I am not here to promote any stocks. Please always do your own research before embarking on any investment decision. I will not be liable for any of your own decisions. Your use of any information or materials is entirely at your own risk. It is your responsibility to ensure that any products, services or information meet your specific requirements. I do not produce material which meets the objectives of any specific financial and risk profile of investors.]
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28-08-2014, 10:20 PM
(This post was last modified: 28-08-2014, 10:21 PM by BlueKelah.)
Tiniest share buy back ever !! @ 34 lots on 27/8
A tiny preview of things to come??
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To round up odd lots treasury shares, perhaps?
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12-09-2014, 03:47 PM
(This post was last modified: 12-09-2014, 03:57 PM by BlueKelah.)
another share buy back yesterday 86 lots and possibly today as well, company has authorized to buy back 17million shares so 17000 lots.
vesting more.
looks like next half year result in november gonna be good.
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i recall this counter. the shareinvestor founder michael leong was top 3shareholders before.
looks undervalued but dividends flat at 1c for donkey years.
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