Nobel Design Holdings

[FFNow]

I think the hardest aspect of value investing is staying true to your values through all kinds of market cycles. Being steadfast during raging bull markets requires the greatest fortitude and mental control in order to resist following the lemmings to their "doom".

This is very true. With the market gone up so much, there is very little margin of safety left compared to during the crisis last year. The euphoria is very slowly but surely building up and I must remind myself everyday not to get sucked into this euphoria.

[dydx]

As at 7Jan11, after a series of purchases, Mr Patrick Kho Chuan Thye's total shareholding interests (direct and deemed) have increased to 10.09%, from his last announced position of 9.11%.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

Quite clearly, Kho has made a serious investment commitment into Nobel Design - a company he doesn't have a direct management role!

[lonewolf]

What even amazing is that Mr Patrick Kho owns 1,771,000 shares as of 24 Mar 2010 (Source: 2009 AR). So effectively he has increased his holdings in ND by 474% in less than 9 months. I wonder whether this is a precursor to a hostile takeover of the firm?

Maybe the recent transfer of shares from JT investment to the 3 executives Bert, Terrence and Jean are meant to be pre-emptive moves to discourage such a move?? After the transfer, they are now the 3 largest shareholders in ND.

Or maybe I'm reading too much into this but it seems strange for the transfer from JT investment to take place so soon after Patrick starts buying ND shares from the open market. (Vested)

[lonewolf]

Nobel Design announced a set of solid numbers for FY2010.

Revenue up 58%
Gross Profit up 48%
PBT up 102%
Net Profit up 101%
Op Profit up 231%
EPS up 100%

Gross margin is 31% (slight dip from 33% for last 2 FY). PBT and Net Profit margin has improved slightly to 14.2% and 12.8% respectively. Ops Margin improve to 12.8% from 6.3%

A final dividend of 0.5c was declared. It is the first time since FY2007 that ND is paying dividend.

Operating cash flow is -5.7 million (FY08:-803K) and FCF is -5.9 million (FY09: -1.6 million). FCF has been negative for the last 3 FY, so I guess I should not be too surprise about the lack of dividend.

[dydx]

Checked my bank account this morning and noted a credit from Nobel Design's $0.005/share Final dividend for FY10 - which is after a long 4-year break with no dividends! This alone in itself is good news!

Perhaps it is also timely to take a look into Nobel Design's FY10 AR.....
http://info.sgx.com/listprosp.nsf/07aed3...1002f8b2e/$FILE/NOBEL%20AR2010%20for%20SGXa.pdf
to look for some telltale signs for perhaps even better things to come for this now seemingly quite well-managed company.

[dydx]

Nobel Design is raising new capital, but via a Renounceable Non-Underwritten 1-for-5 Rights Issue of 3-year Warrants, convertible into new shares at an exercise price of $0.23/warrant.....
http://info.sgx.com/webcoranncatth.nsf/V...E0037D5CC/$file/ProposedRenounceableNonUnderwrittenRightsIssue.pdf?openelement
Under the proposed rights issue, existing shareholders can subscribe for the warrants at $0.02/warrant. Up to a maximum 33,943,750 warrants will be issued, raising an estimated $530k in net proceeds (after costs) upfront. When fully converted by end of Year 3, the warrants will raise a further approx. $7.8m in new capital.

Today (16Aug11), Nobel Design closed at $0.305. A relevant question: Would shareholders and Mr Market welcome such a rights issue?

Nobel Design recently delivered a set of respectable 1H (ended 30Jun11)-FY11 results.....
http://info.sgx.com/webcoranncatth.nsf/V...80044B356/$file/Nobel-Half_Year_2011_Financial_Statements.pdf?openelement

[dydx]

The 1-for-5 Rights Issue of 3-year warrants - convertible into new Nobel Design shares at $0.23/warrant - has been successfully completed with a total 33,620,200 warrants issued.....
http://info.sgx.com/webcoranncatth.nsf/V...4003D6FDD/$file/Nobel-Listing_and_Quotation_of_Warrants.pdf?openelement
The new warrants will start trading on 27Oct11 (coming Thursday).

Based on Nobel Design's last done price of $0.26, the new warrants are "in-the-money" from the start and should trade at a reasonable premium to account for the underlying 3-year equity option. A relevant question: Is Nobel Design at the last done price of $0.26 appropriately priced by Mr Market?

[lonewolf]

Noble Design has announced a signing of MOU for Proposed Sale and Leaseback of Property at 16 Tai Seng Street.

The Board of Directors of Nobel Design Holdings Ltd (the "Company") wishes to announce that the Company has on 18 November 2011 entered into a memorandum of understanding ("MOU" ) with the manager (the "Manager") of a real estate investment trust (the "REIT" ) that is listed on the SGX-ST relating to the proposed sale and leaseback of land and building in the property known as 16 Tai Seng Street Singapore 534138, inclusive of equipment to be identified and agreed upon (the "Property").

(emphasis mine)

Source

I wonder which REIT is eyeing this property. From ND 2010 AR, the property is a 5-storey showroom cum factory building with 6,513 sq metre and a 30-year lease commencing 4 July 2007 with a net book value of $11,084,095. This suggest one of the smaller Industrial REITs.

AIMSAMPS announced a major AEI some time back so I doubt they will be acquiring. So I will guess either Cambridge or Sabana. Both have relatively low gearing and can take on more debts. My guess would be Sabana.

[dydx]

16 Tai Seng St. is a nice building. Nobel Design's own up-market Marquis Qsquare furniture retail showroom now occupies the ground level; the remaining space in the 5-storey building has been leased out to StarHub and World Peace International (South Asia) P/L.

From Nobel Design's 1H results announcement.....
http://info.sgx.com/webcoranncatth.nsf/V...80044B356/$file/Nobel-Half_Year_2011_Financial_Statements.pdf?openelement
, the group derived $2.186m in rental income for the 6-month period ended 30Jun11. Based on this, I estimate 16 Tai Seng St. is bringing in approx. $3.0m a year in rentals.

Based on the above, in a potential sale-and-leaseback deal with an industrial REIT, 16 Tai Seng St. should be able to fetch a price substantially higher than its NBV of $11.08m - possibly over $30.0m? A resultant potential gain of say $20.0m from the sale of this property asset would add approx. $0.119 a share to EPS and NAV, based on Nobel Design's 168.1m outstanding issued shares.

[dydx]

Following last Friday's announcement on the proposed sale and leaseback of 16 Tai Seng St. - which is subject to successful negotiation of final terms, and contract - today (21Nov11) Nobel Design's share price 'jumped' $0.035, or 13.5%, to close at $0.295, with 219 lots transacted.

The price of the recently issued/listed 3-year warrants (Nobel Des W141021) - convertible into new Nobel Design shares at $0.23/warrant - was also marked up by $0.01, to close at $0.07.