Pico Far East Holdings (0752)

[RBM]

Earlier this morning I made the following posting on the Kingsmen Creatives VB thread ..............

QUOTE
Reference CityFarmer's posting on the Kingsmen VB thread of earlier this morning.

I too am pleased for all VB forummers (i.e. including myself) who have been vested in Kingsmen and who have enjoyed the ~ 8.4% (eight point four percent) appreciation in the share price since Kingsmen announced their FY 2012 results during the early morning of 28th February 2013. I see that as at 10.30 am this morning 7th March, Kingsmen shares were trading at S$ 0.84. It appears that Mr. Market appreciated Kingsmen's FY 2012 results.

VB Forummers invested in Kingsmen may also like to know that in exactly the same period, i.e. the begining of trading on the morning of 28th February until 10.30 am this morning 7th March, the share price of Kingsmen's key competitor, Pico Far East, has also done quite well. In fact Pico's share price is up 14% (fourteen percent) in this same time period. And this is without the impetus of a results announcement - Pico had announced their FY results five weeks earlier, on 25th January.

I wonder if we are seeking a re-rating - a positive one - of the sector these two very well managed companies operate in?

I also see that Denver Investment Advisors have increased their shareholding in Pico Far East to 11.27% and that this has now been formally announced by Pico's BoD. If a proof point was needed that these kind of companies (i.e. Kingsmen, Pico) appeal to Private Equity Funds, I would suggest that this is it.

Vested (in Kingsmen and Pico)
UNQUOTE

[RBM]

I attach a link to Pico Far East's Spring 2013 "Imagemaker" newsletter. For these vested or interested in Pico, I would suggest that it is worth the read.

http://www.pico.com/view-enewsletter.php...dium=email

Pico's share price closed at HK$ 2.76 on the HKEX today, up > 60% in the last 12 months.

Vested

[Tiggerbee]

http://www.aastocks.com/tc/stocks/news/a...W.650968/1

筆克(00752.HK)全年多賺14%至2.4億 末期息6仙

筆克遠東(00752.HK) +0.010 (+0.500%) 公布，截至去年10月31日止之全年業績。純利增加13.9%至2.4億元，基本每股盈利19.77仙。公司宣派末期息每股6仙。期內營業額錄得38.33億元，升15.5%。

[Tiggerbee]

http://www.aastocks.com/tc/stocks/news/a...W.650987/1

筆克遠東(00752.HK)冀今年營業額增10%至12%

筆克遠東(00752.HK) +0.010 (+0.500%) 主席謝松發指出，去年營業額達增長目標，2015年的營業額目標為按年增長10%至12%。他認為，新加坡建國50周年、杜拜2020年世界博覽會與當地主題公園及美國經濟復甦等等，均為集團帶來商機。

他指出，雖然內地經濟增長放緩，但國策日益利好消費行業，故品牌推廣的需求將會更大。而油價下跌有利環球消費，相信對公司的服務需求亦會有利好作用

[Tiggerbee]

http://www.aastocks.com/tc/stocks/news/a...W.655710/1

筆克遠東(00752.HK) +0.010 (+0.500%) 宣布，再度贏得2015年米蘭世界博覽會包括阿根廷館、文萊館和柬埔寨館在內的三個展館合約；合約價值達2,200萬元。是次在意大利米蘭舉行之世博展期由2015年5月1日至10月31日。

[Tiggerbee]

Based on today's closing price of $2.01 HKD, stock is valued at 10x PE (TTM). Dividend yield is currently about 5.2% based on interim dividend of 4.5c and final dividend of 10c.

(Vested)

[dreamybear]

Based on today's closing price of $2.01 HKD, stock is valued at 10x PE (TTM). Dividend yield is currently about 5.2% based on interim dividend of 4.5c and final dividend of 10c.

(Vested)

Fast fwd to Year 2024, the stock is trading at HKD$1.8x, valued at trailing 7.x P/E, 6.x% div yield.

Along the years, we have seen Covid and more recently high inflation and geopolitical tensions.

So what must happen for the stock to be a multi-bagger or is it just impossible due to the nature of the business ? If that being the case, shd it be treated more like a dividend stock ? 

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http://www.aastocks.com/en/stocks/quote/...mbol=00752

[weijian]

hi dreamybear,

Personally, I find it disturbing to categorize stocks into buckets.

Just a quick back of envelope calculation based on your Tiggerbee and your numbers:

2015: price=2.01 closing at 10x PE translates to EPS = 2.01/10 = 0.201 hkd
2024: price=1.85 closing at 7.2x PE translates to EPS = 1.85/7.2 = 0.26 hkd

So over the last 10years, the fact is EPS has grown ~30% but the investors' expectations similarly reduced 30% --> One has to rationally decide for themselves if this is warranted? And based on this fact, one can judge and conclude.

[dzwm87]

Did a quick look: It's interesting that Pico's revenue have exceeded pre-pandemic levels for all markets except China although it also look on track to recovering too. Interim DPS is also higher than pre-pandemic level. Perhaps final year DPS will follow too. Seems like they actually emerge stronger from the pandemic.

[weijian]

Did a quick look: It's interesting that Pico's revenue have exceeded pre-pandemic levels for all markets except China although it also look on track to recovering too. Interim DPS is also higher than pre-pandemic level. Perhaps final year DPS will follow too. Seems like they actually emerge stronger from the pandemic.

Based on P/E, Mr Market's expectations has reduced by ~30% and more, despite its recovery to exceed pre covid-19. It seems to be depressed by the entire "China/HK thing" despite 50% of the revenue is deprived outside of China/HK. If 2019 valuations were not excessive for a start, then there is some undervaluation here especially if business activity (not just China) continues to accelerate.

Some other notes:

(1) The company has relatively fixed operating costs. From the huge payables on the balance sheet and stable GPM (1H24:29%, Covid FY20:28%), it probably utilizes contractors for most of its costs - COGS is 70% of revenue and much larger than its own SGA. As such, there is some asymmetry - if business worsens, its sub-contractors are the ones taking the biggest hit. If business improves, its relatively fixed (but much lower) SGA allows a huge ballast to the profitability.

(2) Contract asset turnover~110days, receivables turnover~70days --> Cash conversion is 110+70 = 180days or 6months, typical for project based companies. But it also pays its own sub-contractors in 6 months - So its sub-contractors get paid only after it gets paid. Actual working capital (contract assets+receivables-deposits/payables) probably doesn't increase much when revenue increases.

(3) Based on contract asset:contract liabilities ratio, it is taking ~15-20%% deposit before starting work on the exhibition/event that happens ~4 months later. Then it bills the customer when the exhibition/event happens. I wonder if the customer defaults, do their subcontractors get paid? That said, it is working on a numerous individual events and so defaults will be well diversified in the absence of a large-scale economic slowdown/shutdown.

(4) This business looks pretty legit, especially its huge operating leverage potential.