HupSteel

[bargainhunter]

http://infopub.sgx.com/FileOpen/HUP-2QFY...eID=488448

Q2 loss as per warned in the redevelopment announcement:

http://infopub.sgx.com/FileOpen/Ann%20on...eID=480979

positives: 2c special dividend and "As oil prices have been recovering steadily over the last few months, there are some preliminary signs of
expected pick up in demand for steel products after the Chinese New Year holidays."

[bargainhunter]

NAV $1.3532

Cash + Avail. for sale fin. asset - ALL Liabilities = $0.6097
Trade Receivables = $0.1142
Inventories = $0.2026
Other current assets = $0.0020

The total of these is already $0.9285 vs share price of $0.87. So we are getting the physical assets below free:

Property, Plant and Equipment at cost = $0.1610
Investment Properties at cost = $0.2638

[BlueKelah]

http://infopub.sgx.com/FileOpen/HUP-2QFY...eID=488448

Q2 loss as per warned in the redevelopment announcement:

http://infopub.sgx.com/FileOpen/Ann%20on...eID=480979

positives:  2c special dividend and "As oil prices have been recovering steadily over the last few months, there are some preliminary signs of
expected pick up in demand for steel products after the Chinese New Year holidays."

Unfortunately it seems like oil price will be going down steadily over the next few months. 

may end up as a value trap for years to come if oil prices continue to languish and the steel business does not recover. Shale will be around for next 10 years at least and will cap oil price below $60. In addition, how long can OPEC/Russia keep production down? 


IMO this counter will be dead fish until OnG sector and rig building recovers. Probably can vest if oil prices ever recover to >$70 and rig building resumes.

[bargainhunter]

Hupsteel NAV $1.337 breakdown:

Cash + AR + Fin. Assets - All Liabilities = $0.696
Inventories = $0.2174
Investment Ppties = $0.2629
PPE = $0.1588
Other current assets = $0.0019

[bargainhunter]

for FY2018,

Earnings per share $0.0381

Dividend per share $0.04

Not bad for a "value trap".

[bargainhunter]

http://infopub.sgx.com/FileOpen/Hupsteel...eID=529336

some interesting points mentioned in the Annual Report released this morning under the Chairman's Message:

The Board and management are mindful of the
concerns raised at the last and earlier Annual General
Meetings. A key direction which the management will continue to pursue, will be to seek ways to unlock
value for the shareholders. This can be achieved, for
example, through monetizing long term assets and
returning the cash generated to shareholders by way
of dividends. Management will discuss with relevant
experts to explore ways to unlock shareholders’ value.

The
combined paid and recommended dividends of 4 cents
per share for FY18 are higher than the dividend paid in
FY17, which was 2 cents per share. We hope that we can
sustain or even improve our dividend payout in future.

[lavue]

Can someone here explain how does their dividend policy work?

For the past 5 years, they've made 2.90 cents, -6.45 cents, -15.48 cents, 0.59 cents and then 3.81 cents.

But they've been paying out dividends of 5.00 cents, 0.50 cents, 1.00 cents, 2.00 cents and 4.00 cents.

Each year they are paying out dividends in excess excess of their earnings. This is clearly not sustainable.

Their latest 4.00 cents dividend is supported by the one-off $4.5m gain from the sale of their shophouse at Jalan Besar. But will this payout continue for the next year, or will they draw down from their cash pile? The 2 key industries they are servicing - oil and gas and construction - aren't doing great.

It looks like there are some disgruntled shareholders. Mr Lim Chee San alluded to that himself in his Chairman's Message, "Past AGMs had always seen lively exchange of views between shareholders and management. We would love to preserve the growing culture of dialogue in a mutually respectful manner.." Shareholders are understandably anxious about the sector's prospects, as well as the management's seeming hesitation in unlocking value in their assets.

[BlueKelah]

Can someone here explain how does their dividend policy work?

For the past 5 years, they've made 2.90 cents, -6.45 cents, -15.48 cents, 0.59 cents and then 3.81 cents.

But they've been paying out dividends of 5.00 cents, 0.50 cents, 1.00 cents, 2.00 cents and 4.00 cents.

Each year they are paying out dividends in excess excess of their earnings. This is clearly not sustainable.

Their latest 4.00 cents dividend is supported by the one-off $4.5m gain from the sale of their shophouse at Jalan Besar. But will this payout continue for the next year, or will they draw down from their cash pile? The 2 key industries they are servicing - oil and gas and construction - aren't doing great.

It looks like there are some disgruntled shareholders. Mr Lim Chee San alluded to that himself in his Chairman's Message, "Past AGMs had always seen lively exchange of views between shareholders and management. We would love to preserve the growing culture of dialogue in a mutually respectful manner.." Shareholders are understandably anxious about the sector's prospects, as well as the management's seeming hesitation in unlocking value in their assets.

Sadly another value trap. 

However may have some upside soon if oil prices continue to boom and OnG sector recovers. CIMB will then do some coverage and it would be happy days. 

Either that or a privatisation may happen.

[bargainhunter]

Can someone here explain how does their dividend policy work?

For the past 5 years, they've made 2.90 cents, -6.45 cents, -15.48 cents, 0.59 cents and then 3.81 cents.

But they've been paying out dividends of 5.00 cents, 0.50 cents, 1.00 cents, 2.00 cents and 4.00 cents.

Each year they are paying out dividends in excess excess of their earnings. This is clearly not sustainable.

Their latest 4.00 cents dividend is supported by the one-off $4.5m gain from the sale of their shophouse at Jalan Besar. But will this payout continue for the next year, or will they draw down from their cash pile? The 2 key industries they are servicing - oil and gas and construction - aren't doing great.

It looks like there are some disgruntled shareholders. Mr Lim Chee San alluded to that himself in his Chairman's Message, "Past AGMs had always seen lively exchange of views between shareholders and management. We would love to preserve the growing culture of dialogue in a mutually respectful manner.." Shareholders are understandably anxious about the sector's prospects, as well as the management's seeming hesitation in unlocking value in their assets.

after paying out dividends in excess of their earnings, they still have a huge cash hoard.  
you may want to attend this year's agm, its really quite lively and interesting.  the new ceo seems more open to unlocking value and giving out more dividends.  i've attended the last 2 agms and so far the ceo has been acting on his promises.

[BlueKelah]

Can someone here explain how does their dividend policy work?

For the past 5 years, they've made 2.90 cents, -6.45 cents, -15.48 cents, 0.59 cents and then 3.81 cents.

But they've been paying out dividends of 5.00 cents, 0.50 cents, 1.00 cents, 2.00 cents and 4.00 cents.

Each year they are paying out dividends in excess excess of their earnings. This is clearly not sustainable.

Their latest 4.00 cents dividend is supported by the one-off $4.5m gain from the sale of their shophouse at Jalan Besar. But will this payout continue for the next year, or will they draw down from their cash pile? The 2 key industries they are servicing - oil and gas and construction - aren't doing great.

It looks like there are some disgruntled shareholders. Mr Lim Chee San alluded to that himself in his Chairman's Message, "Past AGMs had always seen lively exchange of views between shareholders and management. We would love to preserve the growing culture of dialogue in a mutually respectful manner.." Shareholders are understandably anxious about the sector's prospects, as well as the management's seeming hesitation in unlocking value in their assets.

after paying out dividends in excess of their earnings, they still have a huge cash hoard.  
you may want to attend this year's agm, its really quite lively and interesting.  the new ceo seems more open to unlocking value and giving out more dividends.  i've attended the last 2 agms and so far the ceo has been acting on his promises.

thanks for the feedback on AGM. However if you look at their management style, its pretty laid back. Did you see how long it took for them to lease out their property and left it empty i think more than a year after completion? They are pretty lucky to have found tenant now as economy here is still okish, otherwise financials would be even worse.

IMHO this stock wont move unless someone come in to privatise, either that or wait till OnG recover loh, but rcent days it seems oil price crashing again, just when it seems there is recovery in sight for OnG. 

Next week China PMI is likely negative means more pain for commodity prices and likely Hupsteel as well.