Cheung Woh Technologies

[dydx]

Aftertax FCF (before capex, presumably mostly for expansion and upgrading) actually showed a marked improvement. Just based on the latest (31May14) NAV/share at $0.3043 alone, Cheung Woh at the last done price of $0.159 is a grossly under-priced stock. I hope the company would resume paying out 2 dividends a year, starting from an Interim in Nov14..

[shn]

Look like my patience with Cheung Woh will finally pay off.

I checked my transaction records. I first bought in December 12. I have averaged down a few times. It is in the black for me now. Hope it will continue to do well.

It appears that a number of companies serving the hard disk drive and automotive industry have been doing quite well lately.

[BlueKelah]

Fundamentals and valuation quite goood but even at 12 cents, div yield still lacking, prefer to get paid to wait.

[shn]

Used to be 1 cent per year. Cut when it was not doing well. Now that it has started to do well, good chance that dividend will be raised this year.

[psolhawk]

http://infopub.sgx.com/FileOpen/2Q2015Re...eID=317768

Greatly improved set of results from Cheung Woh, 1HFY15 EPS 1.78cents, paying interim div 0.5 cents, NAV rising to 31.20cents.

Cheung Woh has recently purchased property to expand their manufacturing capacity in Penang, purchase more equipment, hence an increase in debt. They are pretty optimistic about their sales of HDD aircombs for the enterprise sector which is in line with what I observed for another HDD related company in Bursa.

Should Cheung Woh remain at its current share price till the end of FY15, it will be one of few companies that are going to appear to be cheap. We will see if Mr Market will work its magic. For the dividend obsessed folks, current div yield (soley from interim div only) stands at 3%. It does seem likely that Cheung Woh will reward loyal shareholders by the end of FY15 with a 1cent div (as was the trend before the flooding in Thailand). That will translate to a div yield of around 9% at current price. PE may drop to the vicinity of 5 if 2HFY15 EPS is around the same as 1HFY15, P/NAV stands at 0.5 now.

[dydx]

Aftertax FCF (before capex, presumably mostly for expansion and upgrading) actually showed a marked improvement. Just based on the latest (31May14) NAV/share at $0.3043 alone, Cheung Woh at the last done price of $0.159 is a grossly under-priced stock. I hope the company would resume paying out 2 dividends a year, starting from an Interim in Nov14..

My wish for an Interim dividend has been answered..

[brattzz]

wohoooo!
yeah! when CW left singapore for JB, i thought they were winding up... now they have come back stronger!

Yeah! happy with .5ct dividend!!

[Yoyo]

AR days seem to deteriorate. AR bal increase 50% more than 30% increase in sales. Also explanation for other receivable increase is inadequate given that srap metal sale for the quarter is 880k ( unlikely that long credit term is given to scrap metal customer). Other than these, happy for the results and interim dividend.
Vested

[FatBoi]

AR days seem to deteriorate. AR bal increase 50% more than 30% increase in sales. Also explanation for other receivable increase is inadequate given that srap metal sale for the quarter is 880k ( unlikely that long credit term is given to scrap metal customer). Other than these, happy for the results and interim dividend.
Vested

Hi Yoyo,

Yes, AR balance increased by 53% and Sales increased by 34%. But we shouldn't infer much from the % because the bases are different, so of coz the % are different. We should probably be looking at the absolute movement and try and draw links between P/L and B/S items.

Beg. period A/R balance = $11,144k
add: half year sales = $40,315k
less: collections during period = $(34,459) (balancing figure)
End. period A/R balance = $17,000k

Or if you prefer to limit discussion to Q2 only: AR increases +5.9 mil and sales in same period +21.2 mil, it does not cry a red flag to me. How I read it is: A significant portion must have been collected, otherwise AR should have ballooned much more.

Also, given the results announcement is six months into the year, is it a bit premature to infer anything from AR days outstanding?

Next, trying to understand your comment on scrap metal.
When mgmt explains other receivable movement - they are specifically referring to the change occurring between 28 Feb 2014 and 31 Aug 2014. In other words, $1,056k ($2,498k - $1,442k).

This increase should be viewed in the light of HALF year sales of scrap metal which stood at $1,655k (see page 3 of announcement). Which makes mgmt's comments pretty in line with what actually happened, where is the inadequacy?

To make it even simpler, the following is the likely movement of the balance sheet position...

Beg of the year for other receivables = $1,442k
add: half year scrap metal sales = $1,655k
less: collections = $(599)k (balancing figure)
End of half year balance = $2,498k

If your concern is on sufficiency of collections (in the sense that Q1's scrap metal sales should have been FULLY collected by Q2), bear in mind that the difference between Q1 scrap metal sales and above collections amount is only $156k ($755k - $599k). Assuming your concern is valid and the difference is not collectable, $156k still doesn't seem material whether you compare it to the half year bottom line (write off) or cash balance.

Should we perhaps switch attention to bigger issues such as sustainability of the good results? Maybe we should ask ourselves the following:

P/L:
- is increase in turnover / gross profits sustainable? [contributed $3.5 mil increase to bottom line compared to last year same period] hint: sure HDD picked up, to what lengths? underlying drivers?
- why other operating income increase and can it be sustained? [contributed $1.3 mil increase to bottom line compared to last year same period] - hint: nearly $1 mil of it doesn't seem to be recurring (fx gain is one)
- is the drop in General and admin XP sustainable? [contributed $1.3 mil increase to bottom line compared to last year same period] - hint: yes it likely is, but do we know why? ans: non-recurring one time retrenchment benefits last year.

If we are able to sufficiently address the above few questions, we should be pretty pleased with how we interpret the results of Cheung Woh for this half year, don't you think so?

[Yoyo]

Hi FatBoi

AR Days has increased from 62 days (2Q2014) to 72 days (2Q2015). Likewise 1Q2015 registered 72 days. May be inferred as more lenient on collection in pursuit for higher sales. Trying to gauge the effective of AR management. Nevertheless, agreed that it is not a concern at the moment.

Other receivables increased by 1.1m from 4Q2014, claimed to be mainly due to sales of scrap metal. Considering scrap sales of 652k (4Q2014), 775k (1Q2015) and 880k (2Q2015), given that the 2Q2015 sales (assumed substantial of 880k) is made near end of financial period ie Aug 2014, unless the debt of 652k has been settled by end Feb 2014, this hardly suffice as the main cause of the increase. Just making an observation. Not so much on the dollar quantum, but curious on its breakdown.

Agreed that good result sustainability is of utmost importance. Thanks for the P/L pointers. The first pointer is a tough one, yes, there is a recovery, will last how long, it is everybody guess.

Seldom post, as not good with writing. Learning to post. Thanks for your post and guidance.