Novo Group

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The Company was incorporated on 29 June 1989. The Company changed its name from Neocorp International Ltd. to Novo Group Ltd. on 10 March 2008 following the completion of the acquisition of Novo group of companies. Established in Hong Kong in 2005, Novo Group Ltd is a global steel industry supply-chain management company that provides support services to upstream (suppliers) and downstream (customers) stakeholders throughout the value-chain, from demand aggregation and disaggregation to logistics, trade financing, inspection services and shipping. Novo counts iron ore mines, integrated steel mills and re-rolling mills, major stockists and end-users as amongst its stakeholders. Steel products traded by Novo include raw materials such as iron ore, scrap; semi-finished products such as billets and slab; finished products such as deformed bars, wire rods, tubes, sections, angles, channels, hot rolled coil, hot rolled plate, cold rolled coil, cold rolled sheet; as well as coated steel and special steel items. Novo is helmed by a strong team of management and executive officers who have a combined experience of over 150 years.

Current price at 16c. NAV 41c. PB 0.4. Dividend yield 6% PE 5.

And now it is trading cum dividend.

Is this yet another overlooked undervalued company at this current STI high of near 3100?

(not vested)-but looking at it.
Only did a quick look using FY12 (Apr) results.

Even when they were profitable in FY11, looks like very low Profit Margin (GPM = 6%+ ; NPM = <1%). Looks scary to me as it can easily swing into a loss, which is what happened in FY12.

I didn't look further, perhaps it's in a cyclical biz (Steel + Coal?) and highly dependent on North Asia (China?) and it's now going thro' the low cycle. If so, then have to catch them on the upswing?

Definitely not within my competence.
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------

Debts rollover in China: the curious case of steel

companiesinSharedigg30 August, 2012, 17:53. Posted by Zarathustra

Chinese banks are keeping local government financing vehicles (LGFVs) and many companies afloat essentially by rolling over their debts. Although many of the local governments and companies may well end up unable to repay their loans eventually, banks are at least delaying the inevitable surge of non-performing loans.

The market seems to think that way too as Chinese banks shares have not been doing very well after some seemingly decent recent result announcements as the lack of deterioration of asset quality looked suspicious to many. No one seems to genuinely believe that what have been reported by banks are what really happened.

Earlier we noted that banks are indeed rolling over debts for good local governments (whatever “good” means). Now, we read something rather amusing from Yangcheng Evening News regarding banks possibly rolling over debts owed by steel companies. Based on the first half results of these steel companies, besides the fact that short-term loans are all increasing:

… more and more companies’ cash flow statement are showing similar numbers for the items “debt repayment” and “cash raised from new loans”, as though old debts were being swapped into new debts. For example, Magang raised RMB21.92 billion from new loans, and repaid RMB22.59 billion. Ling Yuan Iron and Steel raised RMB2.8 billion from new loans, and repaid RMB2.93 billion…

Apparently, according to the report, quite a number of other steel companies are reporting similar phenomenon where new loans and debt repayments deviated by less than 10%, and it seems that the last time this happened was in 2009.

This is, of course, almost anecdotal, thus do take that with a grain of salt.

Novo warns of Q1 loss

ByTeo Si Jia print |email this article Novo Group Ltd on Friday said it expects to record a loss in its unaudited consolidated quarterly results for the first quarter ended 31 July.

The decline in trading business was due to the uncertain economic situation in Europe and concerns of a hard landing in China.
Another one goes into the ICU, oops watchlist.

The Board of Directors of Novo Group Ltd. (the “Company” and together with its subsidiaries, the “Group”) wishes to announce that following the Notice of 3 Consecutive Years’ Losses released by the Company, the Singapore Exchange Securities Trading Limited (the “SGX-ST”) has notified the Company on 2 September 2014 that it will be placed on the watch-list with effect from 3 September 2014.
Specuvestor: Asset - Business - Structure.

China bank demands immediate repayment of $19.3 mil from Novo Group

SINGAPORE (Sept 7): Steel trader and tin plate manufacturer Novo Group on Tuesday received a demand letter from China CITIC Bank International to Novowell ETP, a 95%-owned indirect subsidiary of the group, for the repayment of about US$14.3 million ($19.3 million) by Sept 12.

In a Wednesday statement, Novo says China CITIC, China’s seventh-largest lender in terms of total assets, made available “certain banking facilities” to Novowell as a borrower. The sum includes the outstanding principal and accrued interests in respect of the banking facilities.

Notice was also given by the bank that should Novowell ETP fail to make repayment by the deadline next Monday, it “may take further legal actions as it deems necessary to safeguard its interests”.
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