YHI International

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I agreed with your concept of ops which see my shifting of focus to bluechips.
Since C19, I'm net seller of small cap and net buyer of bluechips.

What we deferred is the company picked.
I think air transport and tourism related industry unlikely will be a growth area in near or mid term.

Instead I dipped my foot into HKL, SPH, C&C after C19.
If the price dipped further, will pick up more bluechips.

If the price go up, then just let it be.

Stay home and stay safe, everyone.

the business had gradually improved for the last 3 years.
Even with Covid-19 they still managed to double profit and giving out 7.3% devidend.

This is the ripe time to be in YHI
NAV $0.94
P/E 6.3
Dividend Yield 7.3
NET CASH ~ 13 Cents.

" $71.8 million was provided by operating activities in FY2020. The Group utilised $1.3 million in investing
activities mainly for the purchase of property, plant and equipment and acquisition of additional interest in
subsidiaries. A total of $41.9 million was used in financing activities mainly for dividend payment and
repayment of borrowings. Cash and cash equivalents amounted to $84.5 million as at 31 December 2020
compared to $54.8 million reported as at 31 December 2019"

YHI is working hard to strengthen its business operations, improve efficiency & productivity and focus on its “3R” strategy (namely “Reduce inventory, Reduce accounts receivable and Reduce operating costs”).

This strategy had worked very well can be seen clearly by operating cash in-flow FY20 76,909 and FY19 - 41,625 which allow the Group to swell in Cash and reduce bank borrowing.
(01-03-2019, 05:40 PM)karlmarx Wrote: The price of YHI still looks closer to, rather than further from, fair value.

1) A common reason used to support an argument of why any particular stock is cheap, is because its P/B or P/RNAV is low. The same has been said for YHI. But the question we have to ask ourselves is, why should YHI's (or any stock for that matter) P/B or P/RNAV be trading at closer to 1, compared to where it is currently trading at (~0.48)?

YHI's average ROE for the past 10 years is about 5.1%. Assuming that this is the expected long-term returns of YHI's shareholder, paying a book value of 0.5 -- which is what the market is presently offering -- will mean that the actual return the shareholder can expect is twice of 5.1%, or 10.2%.

Paying a book value of 1 -- which means buying YHI at about twice of current share price -- will mean that the actual return the shareholder can expect is half of 10.2%, or 5.1%.

So unless the future ROE of YHI is expected to be much higher than what it is currently, it is unlikely that YHI's price to move closer to P/B of 1.

Faster forward close to 4 years.

After its Shanghai operations rationalization (stop ops + rent out the space), Covid-19 seems to have given YHI a tailwind as its GPMs are improved from the supply squeeze.

For the last 2 full fiscal years (2020/21), ROE has increased 50% from ~5.1% to 7-7.5%, but P/B is still doing at just slight above 0.5.

Using Karlmarx's rationalization here, shareholders can be expecting 7-7.5% x 2 ~ 15% returns.

Is YHI getting more undervalued or does Mr Market believes that the covid-19 tailwind will not last?

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