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am vested in this. running thru the financials i did some impairment of receivables (30% off), 100% inventory, 4m off the PPE, all of the intangibles/goodwill and I still get a P/B of 0.56 purely on cash/bonds/etc.
but if the company persists in their basically zero ROE biz I guess this cushion will erode at some point.
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Just some quick calculations:
On cash & fixed deposit alone - netting away all liabilities will result in 5.5c per share
On cash & fixed deposit + PP&E - netting away all liabilities will result in 9.9c per share
Clearly, PP&E can skew the conservative figure by a significant bit. If we include PP&E, then we are implying a liquidation value. In other words, how much Avi-Tech is worth if we sold the entire business now.
Don't forget, the market is probably discounting the company for its loss-making semi-conductor biz. It is burning cash of S$2.5m this year. In a few years, the cash will be depleted.
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i figured the PPE isn't worth zero as they drew a loan against it (7+m). that said, agreed that the company is being discounted for its extremely low ROA core biz.
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Thought I surface this counter to buddies again after today's relatively high volume of 1m traded, at around 6cts.
Have been following Avi-tech for few years due to their high cash as some buddies highlighted in earlier threads. However, their imaging and energy efficient division basically 'burn' through their cash over past 4 years, cummulatively around $22m of equity destroyed. Going forward, company has decided to restructure and discontinue this division.
I took a small position mainly because of the company move to discontinue the loss-making division but more importantly, the valuations are compelling. Total cash and equivalents of around $26m against total liabilities of $7.8m. Mkt cap as of last trade is $19m.
Company is inducted into watch list however, perhaps it is a good impetus for CEO to focus on core business next 24months and avoid expensive mistakes again. Will this be a turnaround case?
As usual, please do your own due diligence. My figures above are just estimates.
(vested)
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Latest 1Q results show a small profit of 696k from continuing operations. Balance sheet now has 25.6m of cash & equivalents which translates to a net cash of 7.4 cts against market price of 6.3cts. And you get the company building for free.
Even better, company may be able to realise some value from the sales of its liquidated assets in the USA and boss Lim has bought back some 580k shares at 5.9 cts.
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Thanks for surfacing this counter MOV. I took a look at Avi-Tech and decided it is worthwhile to take a bite of it. I strongly believe that the business had turned around based on the latest financial statements and this is reinforced by the incessant insider buying.
The sale of the US business at a profit and a resumption of dividend payout are catalysts. Best part is the US business which was losing money is now turning profitable! Coupled with a very strong balance sheet and a good discount to NAV, I think at current price it is still very undervalued.
The insiders are still mopping up shares by the day...
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The insider buying continues. Watch this space and keep a lookout for the upcoming result announcements. Any sign of a sustainable turnaround should cause the share price to rocket in my opinion. I'm guessing also that there may be a resumption of dividend payout which will also spur the stock further.
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