Koyo International

[dydx]

The just released FY11 (ended 31Dec11) AR makes interesting reading.....
http://info.sgx.com/listprosp.nsf/6c6be9...b0028bdb4/$FILE/Koyo%20AR11_FA.pdf

While this is a real 'kachang puteh' company, Koyo International has a well-established business which earned a diluted EPS of $0.0088 in FY11, and a rock-solid and highly liquid B/S as at 31Dec11, with NAV/share at $0.083 and Nett Cash/share at $0.072. The company has declared a $0.006/share Final dividend payable on 22May12, with 'XD' date on 8May12.

At today's closing share price of $0.074, is Koyo International still a value buy?

[psolhawk]

It was on my radar for its high net cash at market price of $0.05. At $0.074, I am afraid the margin is not there anymore. I am afraid Koyo doesnt have the financial muscle to compete with other M&E companies like King Wan. Moreover, compare the book orders of Koyo and King Wan and they differ by a tremendous scale. Unless anyone has any latest info, I do not think Koyo can sustain their latest earnings for the next few years. Last but not least, I was turned off by their big boss Foo CH's substantial personal investment in Harry's and another recent IPO company if I am not wrong, when I was scrutinizing the substantial shareholder's sections of ARs.

[dydx]

I was turned off by their big boss Foo CH's substantial personal investment in Harry's and another recent IPO company if I am not wrong, when I was scrutinizing the substantial shareholder's sections of ARs.

Rationally speaking, Mr Foo's personal investments should not have much or any direct bearing on Koyo International's business or finances. Besides, I really don't see anything seriously wrong in his investing into Harry's, which still owns and operates the largest chain of pubs in Singapore. If there is anything, I feel on his own Mr Foo is quite a serious, long-term, and targeted investor. I certainly hope his investment in Harry's would make him some good money over time, on top of the yearly dividends the company has been paying out.

Meanwhile, yesterday (10Apr12) Koyo International managed to edge up by another $0.001 to close at $0.075 - i.e. after accounting for the $0.072/share in net cash reserve, Mr Market is now willing to attach an extra value of $0.003/share to Koyo International's well-established operating businesses, which include quite a few annuity-income-typed medium-term facilities maintenance contracts from MOE. I can't say Mr Market is giving a fair valuation to Koyo International yet.

[psolhawk]

I could be wrong but this is my feeling. By allowing their contracts on hand (ALL ending in 2013) to decrease from $34M in 2010, to $10M in 2011, to $2M in 2012 while a competitor King Wan was able to secure and ramp up the contracts on hand to > $100M that ends further into the future, Koyo doesnt look like their 2011 performance will continue into 2012 and 2013. Likely that the MOE contract will end next year. What's next? At best MOE renews their maintenance contract with Koyo, giving them another $2M+ contract per year. Their gross profit margin for facilities management is at 25%, not bad, but if you consider the gross margin for mech eng and elec eng which are higher at around 30-48%, you see that the facilities management sector is not as lucrative although stable as dydx mentioned. While the dividend this year is attractive at what used to be >10% yield a month or two ago, will this persist? I have no interest in dividend yield but for folks who are into dividend play, this is a concern. If the dividend yield does persist, it eats into the cash which Mr Foo says is an extremely important tool in securing greater discounts for engineering contracts. Mr Foo did mention that they will like to move into facilities management to provide more even earnings but news of that has not been forthcoming for a few years now.

Koyo has said in their latest report that "However, as the economy has weakened since last six months, the Group expects FY2012 to be a challenging year". What do you think of that? Singapore is going on a building craze, and the economy has weakened since last six months (only?). Incoherent logic means to me that they are not candid enough about their ability to secure contracts.

with regards to my earlier comment about harry's, I personally dont invest in companies that are not flying high and yet pay themselves comfortably. again, this is a personal thing.

[dydx]

Today (11Apr12), Koyo International again closed higher at $0.077, up another $0.002 from yesterday's closing price of $0.075.

I suppose buyers at today's closing price of $0.077 must see in Koyo International a higher value, and beyond the coming $0.006/share Final dividend, which should be best looked upon as a discount to the purchase price. A buyer paying a net purchase price of $0.071/share (after accounting for the $0.006/share dividend) would have as asset backing in NAV of $0.077/share (after accounting for the $0.006/share dividend), including a net cash backing of $0.066/share (again after accounting for the $0.006/share dividend). And the share could well earn another $0.0088 in this FY12, giving a projected ROI of 12.4% on the net purchase price of $0.071/share. If we exclude the net cash of $0.066/share from the NAV of $0.077/share before computing ROE of the operating business, potentially Koyo International can deliver a very high ROE going forward.

Putting the above basic number crunching aside, by rational thinking I would simply conclude that a well-established business which is generating a decent profit and positive cash flow ought to have a fair value at a decent premium above its NAV, shouldn't it? Whether Mr Market would agree with me ? - it will depend on him and his mood!

[ngcheeki]

Koyo International announced this morning that the company has won 2 contracts worth S$23.7 million and this will bring the group order book to S$30.5 million. Out of the 2 contracts, 1st M&E contract is with JTC for the "CleanTech 2 Contract" worth S$15.2 million and the other contract is with Kong Meng San Phor Kark See Monastery for S$8.5 million.

However out of the 2 contracts, the JTC contract (S$15.2 million) has already reflected in the forward statement for FY2012 since the company indicated that the order book is S$22 million.

http://info.sgx.com/webcoranncatth.nsf/V...D003EDB98/$file/Annoucementforawardofcontracts3.pdf?openelement

The following is a short summary of the financial health of Koyo International:

Koyo International
Total Current Asset ('000) $18,383.00 Current Non-Current
Total Liability('000) $2,846.00 $2,812.00 $34.00
Net Asset ('000) $15,537.00
Total Number of shares('000) 191,058.50
Net Current Asset Per Share $0.0813
Margin Of Safety $0.054
Mkt Price $0.064 Equtiy
NAV $0.0838 $16,003.00
Price/BV 0.764
Intangible Asset $0.00
NTA $0.084
Price/NTA 0.7641
Cash On Hand Fixed Deposit
Cash $12,498.00 $12,498.00 0
Cash Per share $0.065

Secured UnSecured
Debt < 1 Year $21.00 $0.00 $21.00
Debt > 1 Year $34.00 $0.00 $34.00
Total ('000) $55.00

(Net Debt)/Cash $12,443.00
Net Debt/Cash per share $0.06513

Forward statement:
At the date of this announcement, the Group has approximately S$22.0 million worth of contracts on hand with completion dates ranging from financial years 2013 to 2015. However, as the economy has weakened since the last six months, the Group expects FY2013 to be a challenging year.

[dydx]

1H (ended 30Jun13) results just out.....
http://infopub.sgx.com/FileOpen/Annoucem...eID=233854
As before, the latest B/S is full of cash and just to quote the outlook statement to give a flavour of the evolution of the business going forward.....
"At the date of this announcement, the Group has approximately S$28.8 million worth of contracts on hand with completion dates ranging from financial years 2013 to 2015. As such, barring any unforeseen circumstances, we expect the Group to remain profitable in this financial year."

[Burry83]

1H (ended 30Jun13) results just out.....
http://infopub.sgx.com/FileOpen/Annoucem...eID=233854
As before, the latest B/S is full of cash and just to quote the outlook statement to give a flavour of the evolution of the business going forward.....
"At the date of this announcement, the Group has approximately S$28.8 million worth of contracts on hand with completion dates ranging from financial years 2013 to 2015. As such, barring any unforeseen circumstances, we expect the Group to remain profitable in this financial year."

With the spectacular rise in the share price from 6 cents to the current 15 cents within the last couple of months, is there some positive shift or corporate action? Is it just Mr Market acting his generous self? Cheers to dydx for highlighting this counter.

[CityFarmer]

Base on FTSE Index for small cap and mid cap, base on 2 years price performance

FTSE (small cap) : +24%
FTSE (mid cap) : +12%
STI : +11%

Small cap counters outperformed the STI by large margin. Small cap counters seems the focus of dydx, I presume.

[ZZF]

What just happen? Down 80%.. Lol