Hafary Holdings

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#21
(28-06-2014, 03:23 PM)jim_city Wrote: Just downloaded all the Annual Reports and have not had a chance to go in depth yet. It initially looked promising to me when I looked at the revenue and profit growth of the company until I started typing out this post. Smile

Some concerns:

(a.) Although total amount of the profits have been growing quite well over the past few years, EPS has not followed suit due to placements/ stock splits, etc:
2010 - 2.05 cents
2011 - 4.23 cents
2012 - 2.5 cents
2013 - Approximately 1.63 cents (Less exceptional gain)
2014 - 1.04 cents (for half year)

(b.) If full year EPS ends up at 2 cents, then the dividends would be be betwen 0.4 cents to 0.6 cents (as what Shrivathsa mentioned). Notwithstanding that, this still represents a respectable 3% dividend yield.
(c.) Effect of property cooling measures on Hafary
(d.) Decrease in gross profit margins while increase in other expenses

However, that being said, I think I may not totally agree with Shrivathsa's analysis:
- It is probably not fair to take a snapshot between Dec 2013 and Jun 2014 to measure TenMen's performance. Who knows what the share price would be like in 5 years? Moreover, he probably has collected 3.5 cents of dividends between then and now - if so, his net gain would be 7% or so?
- >100% payout of dividends (of profits for non REITs) is not allowed. I do not see any indication of it being so.

At the end of the day, it might be worth taking a closer look to understand why UOB has such a strong call rating on this stock and to see if there is something which I missed out. My hands are itchy especially since I have not found anything to buy since Mar- April. If only I did not have to have so much work to do today. Sad

Hi Jimcity,

I took the date he mentioned i.e. 25th Dec till date, so, Tenman would have got 1 cent as dividend, not 3.5 cents.

The point I was making was that per se, the thesis has not played till now.

Now, whether it will play out in future, is something we can wait and watch.

By next month, they should announce full year results, expect results around 3rd week AUgust.

For what it is worth, i am expecting to see a 50% plus drop in Earnings per share at the very least.

My estimate is that they will earn around 2.1 - 2.8 cents a share.

Cheers
Disclaimer :-

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures
Reply
#21
(28-06-2014, 03:23 PM)jim_city Wrote: Just downloaded all the Annual Reports and have not had a chance to go in depth yet. It initially looked promising to me when I looked at the revenue and profit growth of the company until I started typing out this post. Smile

Some concerns:

(a.) Although total amount of the profits have been growing quite well over the past few years, EPS has not followed suit due to placements/ stock splits, etc:
2010 - 2.05 cents
2011 - 4.23 cents
2012 - 2.5 cents
2013 - Approximately 1.63 cents (Less exceptional gain)
2014 - 1.04 cents (for half year)

(b.) If full year EPS ends up at 2 cents, then the dividends would be be betwen 0.4 cents to 0.6 cents (as what Shrivathsa mentioned). Notwithstanding that, this still represents a respectable 3% dividend yield.
(c.) Effect of property cooling measures on Hafary
(d.) Decrease in gross profit margins while increase in other expenses

However, that being said, I think I may not totally agree with Shrivathsa's analysis:
- It is probably not fair to take a snapshot between Dec 2013 and Jun 2014 to measure TenMen's performance. Who knows what the share price would be like in 5 years? Moreover, he probably has collected 3.5 cents of dividends between then and now - if so, his net gain would be 7% or so?
- >100% payout of dividends (of profits for non REITs) is not allowed. I do not see any indication of it being so.

At the end of the day, it might be worth taking a closer look to understand why UOB has such a strong call rating on this stock and to see if there is something which I missed out. My hands are itchy especially since I have not found anything to buy since Mar- April. If only I did not have to have so much work to do today. Sad

Hi Jimcity,

I took the date he mentioned i.e. 25th Dec till date, so, Tenman would have got 1 cent as dividend, not 3.5 cents.

The point I was making was that per se, the thesis has not played till now.

Now, whether it will play out in future, is something we can wait and watch.

By next month, they should announce full year results, expect results around 3rd week AUgust.

For what it is worth, i am expecting to see a 50% plus drop in Earnings per share at the very least.

My estimate is that they will earn around 2.1 - 2.8 cents a share.

Cheers
Disclaimer :-

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures
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#22
Movement today... up
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#22
Movement today... up
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#23
190...... +11 pips in 2 days....
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#23
190...... +11 pips in 2 days....
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#24
(24-07-2014, 04:39 PM)kye_lin Wrote: 190...... +11 pips in 2 days....

One liner post, with just reflecting the price trend, is undesirable in VB. We don't forbid updating on share price, but prefer it comes along with some substantiation.

Please take note

Regards
Moderator
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#24
(24-07-2014, 04:39 PM)kye_lin Wrote: 190...... +11 pips in 2 days....

One liner post, with just reflecting the price trend, is undesirable in VB. We don't forbid updating on share price, but prefer it comes along with some substantiation.

Please take note

Regards
Moderator
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
#25
OSK-DMG Research


Hafary Holdings (HAFA SP) BUY (TP: SGD0.35)

Enhancing Abodes, One Tile At a Time



We initiate coverage on Hafary Holdings “Hafary” with a BUY rating and a SOP-derived TP of SGD0.35, representing an upside of 67%. Hafary is a market leader in tile supply in Singapore, offering a wide range of tile and related products for home renovation, private property development and public sector projects. Hafary also owns a portfolio of six property assets with a potential valuation surplus of c.SGD58.1m.

Market leader in tile supply in Singapore, with 34 years of track record. Hafary supplies a wide array of tile and flooring products for home renovation, private property development and public sector refurbishment needs. Founded in 1980, Hafary has demonstrated a strong track record in identifying interior decorative trends and managing working capital and inventory. Its tile supply business typically yields 8-12% net margins and we forecast stable revenue and earnings trends from FY15-17F.



An undervalued portfolio of six property assets. Hafary has accumulated five properties in Singapore and one in China over the past four years, mainly for warehousing purposes. The portfolio of properties has a book value of SGD61.3m, with a valuation surplus of another SGD58.1m. Most of the valuation surplus would pertain to two properties: 105 Eunos Ave 3 and 18 Sungei Kadut Street 2 (which will undergo redevelopment).



Initiate BUY with SOP-derived TP of SGD0.35. We value Hafary using SOP, valuing its tile supply business and property development assets separately. We peg its tile supply business to 10x FY15F P/E, deriving a FV of SGD71.6m. We then add on the book value and valuation surplus of the properties, minus the debt pertaining to property. We derive a FV of SGD152.2m or TP of SGD0.35 per share on Hafary.



Risks include susceptibility to a slowdown in construction and renovation activities in the local market, credit risks and default in payments by customers, as well as inventory obsolescence risks.
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#25
OSK-DMG Research


Hafary Holdings (HAFA SP) BUY (TP: SGD0.35)

Enhancing Abodes, One Tile At a Time



We initiate coverage on Hafary Holdings “Hafary” with a BUY rating and a SOP-derived TP of SGD0.35, representing an upside of 67%. Hafary is a market leader in tile supply in Singapore, offering a wide range of tile and related products for home renovation, private property development and public sector projects. Hafary also owns a portfolio of six property assets with a potential valuation surplus of c.SGD58.1m.

Market leader in tile supply in Singapore, with 34 years of track record. Hafary supplies a wide array of tile and flooring products for home renovation, private property development and public sector refurbishment needs. Founded in 1980, Hafary has demonstrated a strong track record in identifying interior decorative trends and managing working capital and inventory. Its tile supply business typically yields 8-12% net margins and we forecast stable revenue and earnings trends from FY15-17F.



An undervalued portfolio of six property assets. Hafary has accumulated five properties in Singapore and one in China over the past four years, mainly for warehousing purposes. The portfolio of properties has a book value of SGD61.3m, with a valuation surplus of another SGD58.1m. Most of the valuation surplus would pertain to two properties: 105 Eunos Ave 3 and 18 Sungei Kadut Street 2 (which will undergo redevelopment).



Initiate BUY with SOP-derived TP of SGD0.35. We value Hafary using SOP, valuing its tile supply business and property development assets separately. We peg its tile supply business to 10x FY15F P/E, deriving a FV of SGD71.6m. We then add on the book value and valuation surplus of the properties, minus the debt pertaining to property. We derive a FV of SGD152.2m or TP of SGD0.35 per share on Hafary.



Risks include susceptibility to a slowdown in construction and renovation activities in the local market, credit risks and default in payments by customers, as well as inventory obsolescence risks.
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#26
Hafary is currently trading at $0.225 while the voluntary offer is at $0.24. I would think entering now at $0.225 should be able to make some money. Did I miss out anything?
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#26
Hafary is currently trading at $0.225 while the voluntary offer is at $0.24. I would think entering now at $0.225 should be able to make some money. Did I miss out anything?
Reply
#27
(04-01-2015, 03:20 PM)ValueMushroom Wrote: Hafary is currently trading at $0.225 while the voluntary offer is at $0.24. I would think entering now at $0.225 should be able to make some money. Did I miss out anything?

The offer is only for 51% of the shares of each shareholder. But yes, there appears to be a discrepancy between the offer price and the last done market price. If DMG OSK is to be believed, then the Company is worth much more. I'd take all reports with a healthy dose of salt though, and will do my own research instead. Smile
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#27
(04-01-2015, 03:20 PM)ValueMushroom Wrote: Hafary is currently trading at $0.225 while the voluntary offer is at $0.24. I would think entering now at $0.225 should be able to make some money. Did I miss out anything?

The offer is only for 51% of the shares of each shareholder. But yes, there appears to be a discrepancy between the offer price and the last done market price. If DMG OSK is to be believed, then the Company is worth much more. I'd take all reports with a healthy dose of salt though, and will do my own research instead. Smile
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#28
I did a rough calculation, if I buy at $0.225 and accept 50% of my holdings for $0.24, I will make 3% of the initial investment and left with 50% of my holdings within 3 months which translate to 12% P.A.

The question now is whether the post offer price will drop below $0.225. With 51% of the shares acquired at $0.24, I think a strong price support will be at $0.24?
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#28
I did a rough calculation, if I buy at $0.225 and accept 50% of my holdings for $0.24, I will make 3% of the initial investment and left with 50% of my holdings within 3 months which translate to 12% P.A.

The question now is whether the post offer price will drop below $0.225. With 51% of the shares acquired at $0.24, I think a strong price support will be at $0.24?
Reply
#29
(04-01-2015, 06:38 PM)ValueMushroom Wrote: I did a rough calculation, if I buy at $0.225 and accept 50% of my holdings for $0.24, I will make 3% of the initial investment and left with 50% of my holdings within 3 months which translate to 12% P.A.

The question now is whether the post offer price will drop below $0.225. With 51% of the shares acquired at $0.24, I think a strong price support will be at $0.24?

I thought the idea is to focus on the business and how it is going to perform, rather than worry about whether the price forms a "support" or not. If a business continues to grow and is able to generate high returns, then the share price should correspondingly follow as well.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#29
(04-01-2015, 06:38 PM)ValueMushroom Wrote: I did a rough calculation, if I buy at $0.225 and accept 50% of my holdings for $0.24, I will make 3% of the initial investment and left with 50% of my holdings within 3 months which translate to 12% P.A.

The question now is whether the post offer price will drop below $0.225. With 51% of the shares acquired at $0.24, I think a strong price support will be at $0.24?

I thought the idea is to focus on the business and how it is going to perform, rather than worry about whether the price forms a "support" or not. If a business continues to grow and is able to generate high returns, then the share price should correspondingly follow as well.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Reply
#30
Yup agree with you we should look at the business : )

This is one of the "trading" buy. I remember reading some years ago Warren Buffett does arbitrage trade, where he makes big bets on take over deals with high chance of completion and profit the price differences.

Think Hafary seems to fit the bill : )
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#30
Yup agree with you we should look at the business : )

This is one of the "trading" buy. I remember reading some years ago Warren Buffett does arbitrage trade, where he makes big bets on take over deals with high chance of completion and profit the price differences.

Think Hafary seems to fit the bill : )
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