Nam Lee Pressed Metal

[header]

Tks ngcheeki. Earlier drop them through an email through their website but no reply.

[SLC81]

Namlee's result is out. 26% Increase in NP.
EPS = 5.85.
Net cash increase to more than 50 Mils.
And 2 Cents dividend, up from 1.5 Cents.

[dydx]

I guess shareholders and potential investors alike should be pleased with the just announced FY12 (ended 30Sep12) full-year results.....
http://info.sgx.com/webcoranncatth.nsf/V...500428939/$file/NamLeeFY2012.pdf?openelement
Despite dampened demand for the Group's aluminium industrial products (mainly frames for container refrigeration units) and a 7.3% yoy decrease in revenue to $155.1m, Nam Lee's NP posted a solid 26.6% yoy increase to $13.874m, translating to a fully diluted EPS of $0.0585. Without doubt, Nam Lee is a direct beneficiary of the current major ramp-up of the HDB building programme, with the actual building works expected to stretch for another 3 years at least. Conceivably, Nam Lee could deliver a total EPS of $0.15 to $0.20 in the next 3 FYs.

As at 30Sep12, Nam Lee's net cash balance has increased to $50.304m, translated to a whopping $0.2126/share (based on the latest 236.609m issued shares). To be realistic, I think we should also add to this a reasonable portion of Nam Lee's trade debtors balance of $24.606m, which as a near-cash item is practically self-financed by equity. So indeed we have a mini-bank within Nam Lee's latest B/S!

Shareholders should be very pleased with the enhanced total dividend payout of $0.02/share (Final + Special), vs. total $0.015/share for last FY11.

At this point of Nam Lee's corporate evolution, shouldn't Mr Market be willing to price this well-established and nicely profitable business at least at its latest NAV of $0.472/share ?

[freedom]

imo, Nam Lee should always trade at a discount to its NAV. Though it has tons of cash relative to its size, you only get 2 cents dividend(1 cent is special) as an investor. It is unlikely that the company is actively increasing shareholder value or liquidating itself. The return on its equity is not high enough to warrant it to trade around its NAV. Plus, low liquidity.

[dydx]

Obviously investors forming a rational Mr Market over time will choose to value a well-established business based on its predictable future earnings and cash-flow streams. Obviously rational investors will choose to take note of and assign additional value to valuable and/or readily distributable assets already existing within a company.

In Nam Lee's case, the business has been generating solid positive cash year-after-year for a long time now, and a big portion of that has been retained and now exists in the form of an over-sized net cash reserve in the latest B/S. Just based on the latest net cash reserve balance of $50.304m alone, Nam Lee is fully capable of paying out another Special dividend to the tune of $0.15/share - without any negative impact to the underlying business. Imagine what will happen to the share price when that happens by way of a surprise simple announcement

So let me ask a relevant question: Without considering the benefit from any future growth of Nam Lee's business and profits, is the last done (as at 29Nov12, yesterday) share price at $0.33 a fairly priced one, bearing in mind the underlying business in the just ended FY12 generated an EPS of $0.0585 and a FCF (note: pretax, before capex) of $19.073m or $0.0806/share, and the latest B/S holds as much as $68.7m in adjusted free cash (inclusive of 75% of trade debtor balance) equivalent to approx. $0.29/share which is funded by own equity? I though the answer is quite obvious!

[shn]

I did not realize there is such an under-valued counter. Cash per share is 21 cents. Thanks for highlighting it. Awsome!

[pianist]

i guess u have bought heavily into it recently?

[Curiousparty]

May I ask what is the downside to this counter?
What are the key business risks?

Tks.

Obviously investors forming a rational Mr Market over time will choose to value a well-established business based on its predictable future earnings and cash-flow streams. Obviously rational investors will choose to take note of and assign additional value to valuable and/or readily distributable assets already existing within a company.

In Nam Lee's case, the business has been generating solid positive cash year-after-year for a long time now, and a big portion of that has been retained and now exists in the form of an over-sized net cash reserve in the latest B/S. Just based on the latest net cash reserve balance of $50.304m alone, Nam Lee is fully capable of paying out another Special dividend to the tune of $0.15/share - without any negative impact to the underlying business. Imagine what will happen to the share price when that happens by way of a surprise simple announcement

So let me ask a relevant question: Without considering the benefit from any future growth of Nam Lee's business and profits, is the last done (as at 29Nov12, yesterday) share price at $0.33 a fairly priced one, bearing in mind the underlying business in the just ended FY12 generated an EPS of $0.0585 and a FCF (note: pretax, before capex) of $19.073m or $0.0806/share, and the latest B/S holds as much as $68.7m in adjusted free cash (inclusive of 75% of trade debtor balance) equivalent to approx. $0.29/share which is funded by own equity? I though the answer is quite obvious!

[dydx]

May I ask what is the downside to this counter?
What are the key business risks?

Tks.

Nam Lee - listed since Oct1999, i.e. for 13 years!- has a long business history which dates back before 1975. The business has grown over the years, and has become more sophisticated since IPO - but has always remained conservatively managed, especially financially.

As a specialist sub-contractor in the value-chain of the local construction industry, Nam Lee is exposed to the normal business risks of project delays, price competition, techical issues, etc. Likely because of the management's shrewdness and experience in the trade, Nam Lee has so far avoided major problems by working with the better customers and main-contractors. I think we can better appreciate this point, the quality aspects within the business and the diversified customer base that supports it, by visiting Nam Lee's website and reviewing its products, projects and capabilities under the "GALLERY" section.....
http://www.namlee.com.sg/

To me, the key business risk in Nam Lee's business is "being played out by a customer in a major and technically complex contract, leading to non-payment and/or a prolonged legal suit". Based on what I know from the group's recent business history, so far Nam Lee has a good tack record.

As Nam Lee has been paying out a regular yearly dividend since 2000, and has also increased its dividend payout in the recent years, I believe this rather 'old-fashioned' company has already attracted a good base of local, longer term shareholders. With the current massive HDB building programme providing an additional ballast to the group's business volume in the next few years, I suppose it is reasonable to believe that Nam Lee should continue to do well financially and reward its shareholders, and also attracting in new investors.

[shn]

Hi pianist,
I guess the question was directed to me. Yes, I bought some recently. Not easy to find the right stocks at the right price lately.