USP Group (formerly: Unionmet)

[sgd]

This is a S-Chip company that produces indium. Has high cash and low debts. asset over debt ratio is 8 to 1.

Indium is a rare earth element with atomic number 49. Indium is a by product of zinc is used in semiconductors, used for coating solar panels engine turbines but mostly Indium is popular for the LCD market.

The market for LCD is huge. In 2011 it was estimated 100million smart tablets were shipped The Last year target for 2012 was 160million devices but with the new Iphone5 recent launch Apple already forecasting sales of 170-200 million devices for 2012. Not counting smart devices from other competitors also not counting millions of LCD monitors or televisions and other gizmos globally that will sell in 2012 and going forward into 2013

While the market for LCD is huge the production is small, only around 1800 metric tonnes a year. Around 65%-70% of that figure is recoverable from various recycling only 700 tones are from actual production and around half of that is from china and everybody knows China now has a quota restriction for rare earth elements.

if you look at these forces at play a strong industrial demand from electronic/semiconductor industries,a low production and export restrictions from china is not very difficult to guess the outcome.

vested

[Musicwhiz]

Profit warning just out today.

http://info.sgx.com/webcoranncatth.nsf/V...50027F091/$file/UM-ProfitWarning-260912.pdf?openelement

Why are profit margins so thin? Are they being squeezed within the supply chain? Would be good to do a 5-Forces analysis on it (for those vested).

Also, how are competitors doing? Is the industry suffering or just Unionmet?

[KopiKat]

Extracted from "USGS Mineral Commodity Summaries 2011", Pg 74-75,

Substitutes : Indium’s recent price volatility and various supply concerns associated with the metal have accelerated the development of ITO substitutes. Antimony tin oxide coatings, which are deposited by an ink-jetting process, have been developed as an alternative to ITO coatings in LCDs and have been successfully annealed to LCD glass.

Carbon nanotube coatings, applied by wet-processing techniques, have been developed as an alternative to ITO coatings in flexible displays, solar cells, and touch screens. Poly(3,4-ethylene dioxythiophene) (PEDOT) has also been developed as a substitute for ITO in flexible displays and organic light-emitting diodes. PEDOT can be applied in
a variety of ways, including spin coating, dip coating, and printing techniques. Graphene quantum dots have been developed to replace ITO electrodes in solar cells and also have been explored as a replacement for ITO in LCDs.

Researchers have recently developed a more adhesive zinc oxide nanopowder to replace ITO in LCDs. The technology was estimated to be commercially available within the next 3 years. Gallium arsenide can substitute for indium phosphide in solar cells and in many semiconductor applications. Hafnium can replace indium in nuclear reactor control rod alloys.

[sgd]

mining for rare earths according to study it's a dirty business that requires a lot of water and can produce a lot of hazardous wastes like radiation so obviously not everybody can or would like to engage in this sort of business especially if there are environment laws that can prosecute like in America Europe and many developed countries. So while there are substitutes being developed to overcome shortages but getting around these laws and surviving lawsuits from green lobbies and still making it cheap are totally different matter could take light years.

for more info read Rare Earths: The Dragons Pearl

With quota restriction comes export taxes and chinese government have slapped 5% on indium exports, but for domestic markets these restrictions do not apply. Not sure if these latest taxes have anything to do with decrease in margins. The good news is lately chinese government may be considering lifting this tax.

[mysterion]

Unionmet has a negative enterprise value, similar to several S-chips. Based on Q2 2012 results, cash and cash equivalents are at 27m, with total liabilities at 5m. Hence, company is net cash at 22m and currently priced at 19m. Assuming no fraud, the company looks attractive based purely on an asset valuation.

Also, NNWC is around 31m, and so there's about a 40% margin of safety. Main risks would be accounting fraud (cash is not there) or cash burn due to the loss-making operations (highly possible in such a low-margin, highly competitive commodity industry). Would probably fit in nicely with an investor's net-net farming-style portfolio.

[CityFarmer]

An announcement of profit warning

http://info.sgx.com/webcoranncatth.nsf/V...50027F091/$file/UM-ProfitWarning-260912.pdf?openelement

The Board of Directors (the “Board”) of Unionmet (Singapore) Limited (the “Company” or together with its subsidiaries, the “Group”) wishes to inform the shareholders of the Company and the investors that the Group will record a loss for the financial period ended 31 August 2012 (“3Q2012”), compared to a profit for the corresponding financial period ended 31 August 2011 (“3Q2011”)

[sgd]

any middle east crisis naturally oil prices will escalate.

now if china/japan "north east crisis" does it means rare earth prices will escalate?

http://proedgewire.com/rare-earth-intel/...s-embargo/

[sgd]

this is a bit old

Apple to include ITO coating on iPad Mini

[sgd]

This counter cheong last few days reaching a high of 6.4 cts. If you have managed to buy in to this when it was at a low of 2.7 cts in nov last year you have now made over 100% profit.

congratulations to all who bought this.

[CY09]

Unionmet has undergo a change of company name and has purchased two companies.

However what is intriguing is the recent share buybacks by the company. Any buddies have knowledge of what Unionmet ( now USP) is doing. I am interested in the fact there are sudden buybacks by the company and whats more its above NAV pricing