XMH Holdings

[kyle]

XMH's full year results is out. Nothing interesting in it with a drop in dividends to conserve cash (likely).

Will be interested to see how the 2 acquisitions will contribute to the XMH's cash and profits.

http://infopub.sgx.com/FileOpen/XMH%20-%...eID=357911

Seems like markets always gave it a premium valuation even when it had negative legal settlement and quite uncertain/gloomy outlook last year. With the cut of dividend, hope the price can drop down to book value or below...

ZPA two months result looks pretty good with a 5.3m revenue, 2m GP, and 0.9m NP. The PPE is only 1m compared to its total 19m assets. The current contract work stands at 7m. Seems to be a good acquisition.

[sykn]

Hi all, I've considered but am half-hearted about investing in this company as the net earnings seem to be declining the last 3 years - $11.4M (FY13), $6.13M (FY14) and $5.43M (FY15). Does anyone know why they spent so much on CAPEX ($24.8M) in FY15 to pay for the factory in Tuas, not counting the pre-payment for the lease of the land? On one hand the acquisition of MPG and Z-Power seems to be good moves, but on the other hand, cash is dwindling and debt has risen at a time when the industry is under considerable stress. Would any forrumer care to share your assessment of this business?

[CityFarmer]

Hi all, I've considered but am half-hearted about investing in this company as the net earnings seem to be declining the last 3 years - $11.4M (FY13), $6.13M (FY14) and $5.43M (FY15). Does anyone know why they spent so much on CAPEX ($24.8M) in FY15 to pay for the factory in Tuas, not counting the pre-payment for the lease of the land? On one hand the acquisition of MPG and Z-Power seems to be good moves, but on the other hand, cash is dwindling and debt has risen at a time when the industry is under considerable stress. Would any forrumer care to share your assessment of this business?

The main reason for the downtrend, is its core biz in Indonesia. It is real bad, based on my record. FY2015 XMH (core biz) downed more than half (43 mil) from the previous peak (98 mil in FY2013). The merits of its biz model, are light fixed asset, and negative WC. It is still profitable, even under the adversity. I am taking the current state, as part of biz cycle, rather than structure issue.

The Capex is mostly on subsidiaries acquisition, not all on Tuas facility. It is only few million S$ spend on the Tuas facility, which is necessary, as biz expanded, IMO.

The two acquired subsidiaries, are contributed positively. I saw synergies, and both are having ROI > 23% @ purchased price in FY2015. Both should worth more than acquired cost, IMO

(sharing a view, and accumulating at a greedier price )

[investingsgx]

Hi all, I've considered but am half-hearted about investing in this company as the net earnings seem to be declining the last 3 years - $11.4M (FY13), $6.13M (FY14) and $5.43M (FY15). Does anyone know why they spent so much on CAPEX ($24.8M) in FY15 to pay for the factory in Tuas, not counting the pre-payment for the lease of the land? On one hand the acquisition of MPG and Z-Power seems to be good moves, but on the other hand, cash is dwindling and debt has risen at a time when the industry is under considerable stress. Would any forrumer care to share your assessment of this business?

The main reason for the downtrend, is its core biz in Indonesia. It is real bad, based on my record. FY2015 XMH (core biz) downed more than half (43 mil) from the previous peak (98 mil in FY2013). The merits of its biz model, are light fixed asset, and negative WC. It is still profitable, even under the adversity. I am taking the current state, as part of biz cycle, rather than structure issue.

The Capex is mostly on subsidiaries acquisition, not all on Tuas facility. It is only few million S$ spend on the Tuas facility, which is necessary, as biz expanded, IMO.

The two acquired subsidiaries, are contributed positively. I saw synergies, and both are having ROI > 23% @ purchased price in FY2015. Both should worth more than acquired cost, IMO

(sharing a view, and accumulating at a greedier price )

price not expensive now. but long term wise will depend on their busienss strategy

[sykn]

CF, thanks very much for the clarifications. When I went through the annual reports under their cash flow statements, AR13 shows $8.4M outflow for land lease prepayment (I assume this is for the Tuas factory); then in the recent FY15 financial statement, it shows $10.4M for acquisition of subsidiary which I think refers to the acquisition of Z-Power, but there is another $24.8M cash outflow for acquisition of PPE, which in the explanatory notes on page 15 says is for construction of factory, consolidation of new subs (only $1M) and net of depreciation. I assume based on past figures that maintenance CAPEX is around $3M and therefore the balance is considered growth CAPEX, but what kind of growth, is a mystery to me. Also, its ROE which had been in the 20's, slumped to around 10 in the last two FYs, so we can't just blame it on the crash in oil prices since the slump occurred before that. Would you agree? Thanks.

[CityFarmer]

CF, thanks very much for the clarifications. When I went through the annual reports under their cash flow statements, AR13 shows $8.4M outflow for land lease prepayment (I assume this is for the Tuas factory); then in the recent FY15 financial statement, it shows $10.4M for acquisition of subsidiary which I think refers to the acquisition of Z-Power, but there is another $24.8M cash outflow for acquisition of PPE, which in the explanatory notes on page 15 says is for construction of factory, consolidation of new subs (only $1M) and net of depreciation. I assume based on past figures that maintenance CAPEX is around $3M and therefore the balance is considered growth CAPEX, but what kind of growth, is a mystery to me. Also, its ROE which had been in the 20's, slumped to around 10 in the last two FYs, so we can't just blame it on the crash in oil prices since the slump occurred before that. Would you agree? Thanks.

I usually observed the Tuas facility cost, by looking at the Property, plant and equipment statement. Yes, I missed the land lease prepayment, which is accounted as different item under balance sheet. You seems right base on FY2015 PPE increase. Let's confirm on final annual report

The impact, isn't entirely from lower oil price, but also the down-cycle of commodities export from Indonesia, which happened earlier, and still happening now.

I reckon Tuas facility will optimize the company process, by bringing all operations under one roof. We may see the impact, after FY2016, since the facility is expected to complete late 2015.

[sykn]

Noted thanks. To me, this is still a pretty well-run company hit by double whammy of commodities down cycle and oil in the last couple of years, but if the price declines some more, I will likely buy in. Cheers.

[CityFarmer]

The company released its 1QFY16 report, nothing to highlight, except the following statement from Mr. Elvin Tan Tin Yeow, the Chairman and CEO. The "projects" business are going as usual, and lumpy in nature, but outlook remain bright. The "distribution" biz from Indonesia, seems recovering, based on the CEO statement...

----------
“As macro uncertainties continue to plague the environment we operate, our business
continues to be affected. However, it is reassuring to see that our Group’s margins remain relatively
healthy. There are headwinds and we will continue to explore opportunities to secure new contracts.
We have already seen an increase in enquires for marine engines from Indonesia and aim to
optimise these opportunities. ”
http://infopub.sgx.com/FileOpen/XMH%20-%...eID=369408

[LocalOptimal]

With the recent turmoil in China,  after xD and recent result announcement (47% dip in profit)  it has dipped to 15 cents.  It's now 1.2 to book and even with reduced dividends,  it's at a yield of 5+%.

I may be tempted to add on more price weakness.  Given the recent acquisitions, there could be more synergies and growth and thus upside can be expected.

[CY09]

Hi Cityfarmer/other VB "analysts",

Any new views on XMH after completion of its HQ? From my own calculation, 9M ops Cashflow before WC changes seems to be strong at 8 mil, and if we were to estimate 2mil of annual capex, the company is likely to generate FCF of about 7 mil, after interest and taxes paid. That's about 15% FCF yield at current market cap. Of course, the key assumption is that there will be no deterioration of its key components which will affect cashflow and P&L. The area I am interested in is its backup generator business.

What's your view on the industry outlook and how will it affect XMH?

Interested and monitoring.