GP Batteries International

[pianist]

learning from the experts here..indeed an eye opener

[ngcheeki]

repost from Top 5 Favourite Undervalued Companies SGX thread for easy reference!!

What do you think about GP Batt recent rights issues? It looks like they need capital injection.
I was once a shareholder of GP batt but after a few years, I was pretty disappointed in it as its earnings never seem to recover. I sold it 1.5 years ago at $1.

As stated in the GP Batteries thread by some of the experienced buddies in this forum, GP Batteries current net gearing of (27%) is one of the lowest in the last few years i.e. Cash of $132mil with total debt of 200 mil. Furthermore, with the termination of Vectrix (Electric scooter) JV, the need for additional CAPEX or $$$ should be much less. Hence, there is no reason why GP Batteries should raise additional capital.

http://www.valuebuddies.com/thread-2890-page-2.html

The reasons why GP batteries is picked mainly because of the following reasons:

1. Low price to book: last transacted price of 59.5 cents versus post right issued NAV of 169 cents (i.e. from GP Battery OIS)

2. High possibility of recovery: With the termination of loss making Vectrix JV, further 'bleeding' should stop since no additional cash is required to inject to the R&D of electric scooter. If fact, if not for the impairment made for Vectrix (i.e. 26.3 mil), GP Bat's 9MFY2014 should be a small profit instead of a loss. Furthermore, based on the forward guidance in 3QFY2013, the prospect for GP Bat should be reasonable good

"Whilst there are signs of an economic upturn, the recovery remains fragile. The Group will continue reshuffling its sales resources to focus on key strategic market segments and customers, and we are
complemented by other channel partners to improve our market coverage. As we see relatively stronger backlog on the book, we are cautiously optimistic on the sales in the coming quarter."

In addition, with the impending sale of their pioneer road property GP Bat is expected to realise a gain of around 9 mil. in 1st half of next financial year. FYI, the pioneer road property is recorded only at 1.86 mil in the book versus the selling price of 11.2 mil. Are the rest of their properties the same??

When recover will GP Bat still trade at this distressed price to book? i think probably not.

3. Undervalued subsidiary and assets

Besides, the understated the value of property (see above) in the book. GP Battery also understate the value of the subsidiary. 5% of Zhong Yin (Ning Bo) battery ('000) is worth $10.4 mi and the company will make a further gain of $1.2 mil gain if the sale if completed. See the following for more detailed. By the way, anyone know what happen to the deal, does it fall through??


http://infopub.sgx.com/FileOpen/Dispose_...eID=253940


Please do your due diligence.

[Ken123456]

I read the annoucement from Q3 that vectrix incur impairment loss. Didnt see anywhere that vectrix has been sold. If sold, there should also be announcement on the consideration.

Please guide me if it sold indeed

[greengiraffe]

The entire GP Group has gone dunno where for donkey years. I have odd lots in both GP Ind and GP Bat and honestly have no interests what so ever whenever annual reports arrived.

Batteries are supposed to be stable businesses but I think competitive structures must have changed over time.

Over the years, I remembered GP Bat being hit by soaring raw material costs before being hit by labour problems. Then came this huge write-offs in electric vehicle investments which started in the mid 90s and surprisingly took so long to blow up.

I guess these guys are taking calculated bets to survive in their own industry. As capital allocators, apart from merely looking at financial numbers, we must also decide if this is an industry that we want to be in and if this is indeed a good company to invest with.

There is no doubt some elements of conspiracy theory going on here but is this a real bargain?

Note that GPI is buying both GPB shares and rights...

[ngcheeki]

I read the annoucement from Q3 that vectrix incur impairment loss. Didnt see anywhere that vectrix has been sold. If sold, there should also be announcement on the consideration.

Please guide me if it sold indeed

Hi Ken,

Base on my understanding Vectrix group is in the process of winding down and not sold yet. Hopefully, the 45% owned Vectrix Group will be sold to the other partners.

"The Vectrix Group failed to raise additional capital. The other shareholders of Vectrix decided not to fund the projects further because of significant cost overrun and their commercial viability. The Group did not have the required resources to continue the projects alone. Accordingly, Vectrix’s management team was in the process of discussing with concerned parties to wind down its operations. As a result, the Group fully provided for its investment in and receivables from Vectrix Group of companies."

Some news of Vectrix from the net.

"Shutdown of US operations
According to a Spanish news magazine, by January 2014 Vectrix will cease all US operations.[2] After numerous manufacturing problems resulting in failed batteries and nonfunctioning scooters, Vectrix's parent company Gold Peak, a Chinese battery manufacturer, decided to close down all Vectrix's US facilities as of December 31, 2013.[2] The report indicates that Vectrix will maintain its Poland fabrication plant in order to continue to supply parts for its joint venture with Daimler's Smart division.[2]"

http://en.wikipedia.org/wiki/Vectrix#cit..._digital-2

[cif5000]

Note that GPI is buying both GPB shares and rights...

Got buy rights meh?

[freedom]

got buy rights today. 1M rights, I believe.

I would not be surprised that a special dividend is on the way to repay the parent.

[cif5000]

Note that GPI is buying both GPB shares and rights...

Got buy rights meh?

Sorrie, got lah, notified under GPI.

http://infopub.sgx.com/FileOpen/GPInd_pu...eID=275262

[mrEngineer]

I still don't understand what is e rights issue for..

[cif5000]

I still don't understand what is e rights issue for..

At $0.80 (before rights announcement), the share price was already very depressed.

Without the rights do you think GPI could buy GPB shares at $0.60 and below?