LHT Holdings

[dydx]

At the forthcoming 27th April AGM, amongst other things, I'll be interested to hear what Management states regarding the updated outlook for LHT's Woodchips Purchase Agreement with TP Utilities - a 15 year agreement which is due to see revenue generation commence as early as the coming quarter - it may possibly start only next year. In the context of LHT's modest - but improving and growing - financial dimensions, the TP Utilities agreement could be (repeat: could be) a key piece of business for the company. Annual revenues expected from the sale of Woodchips were quoted by LHT in their 15th August 2011 SGX disclosure to be in the range of S$ 900,000 to S$ 5,400,000.

This 15-year woodchips supply contract with TP Utilities and the recently expanded woodchips production capacity also mean that LHT is now playing an even bigger role in recycling wood wastes - derived from old/broken wood pallets, tree trunks/branches collected by various contractors of LTA/URA/HDB/NEA/Nparks, etc. - within Singapore. I particularly like this combined social/economic role LHT is playing/contributing in Singapore's overall waste/energy recycling efforts as well as keeping its environment clean.

I now look forward to the coming $0.005/share Final dividend for FY11, which will be paid on 25May12.

Would Ms Yap's regular purchases, together with seemingly increasing market interest in LHT as a stock counter, eventually raise the share price above its corresponding NAV/share, which hit $0.1797 as at 31Dec11 ? I certainly hope so, as there is little doubt that LHT has emerged to become a healthy local business enterprise capable of delivering steady business growth and profits.

[RBM]

Very well stated on all counts dydx, IMHO. Over recent years LHT is certainly delivering.

In a generally miserable SGX trading session today, where fallers outnumbered gainers by a ~ 5:3 ratio and all but one of the Primary Index Constituent Stocks were traded down, LHT's share price was markedly higher in comparitively high volume. Up ~ 8.5% to close at S$ 0.141 per share in volume of 224,000 shares. I wonder if Executive Director Yap was again amongst the buyers?

I do hope that this years LHT Annual Report indicates higher shareholdings by LHT's three non-executive directors. Last year, the three non-executive directors held a meagre 40,000 LHT shares between them, with one of them holding none at all, despite a four year tenure as an LHT non-executive director. It niggles me a bit when Directors on boards hold zero shares for a prolonged period - one of my many idiosynchrasies. Sorry.

Vested

This 15-year woodchips supply contract with TP Utilities and the recently expanded woodchips production capacity also mean that LHT is now playing an even bigger role in recycling wood wastes - derived from old/broken wood pallets, tree trunks/branches collected by various contractors of LTA/URA/HDB/NEA/Nparks, etc. - within Singapore. I particularly like this combined social/economic role LHT is playing/contributing in Singapore's overall waste/energy recycling efforts as well as keeping its environment clean.

I now look forward to the coming $0.005/share Final dividend for FY11, which will be paid on 25May12.

Would Ms Yap's regular purchases, together with seemingly increasing market interest in LHT as a stock counter, eventually raise the share price above its corresponding NAV/share, which hit $0.1797 as at 31Dec11 ? I certainly hope so, as there is little doubt that LHT has emerged to become a healthy local business enterprise capable of delivering steady business growth and profits.

[dydx]

LHT's latest FY11 (ended 31Dec11) AR makes interesting reading.....
http://info.sgx.com/listprosp.nsf/07aed3...e000ed2de/$FILE/LHT_AR2011(SGX).pdf

The audited accounts show higher NP and NAV figures than those in the FY11 full-year results announcement. Accordingly, LHT's NAV/share as at 31Dec11 has been revised upwards to $0.1804.

Rationally speaking, a well-established, profitable and financially healthy business should be worth more than its NAV, shouldn't it?

[dydx]

Yesterday (11Apr12), Ms Yap scooped up another 184 lots (out of a total 224 lots transacted) and paid an average price of $0.1402/share.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument
With this latest purchase, Ms Yap now owns 11.38% of LTH.

Today (12Apr12), LHT again closed higher at $0.15, up another $0.009, with a total 162 lots transacted. Ms Yap's work again?

[RBM]

I have just finished reading LHT's 2011 Annual Report - thank you dydx for alerting forummers to its issue earlier today,

The LHT Annual Report 2011 makes for a worthwhile read and I would encourage at least a brief review by those considering an investment in LHT. Standing back from the annual report, LHT comes across across as a serious, diligent and highly responsible little company. Some may say conservative and "a bit old fashioned" - but I believe their no-nonsense, non-chest-beating, hardworking approach is now paying off and being recognised by shareholders, new and existing.

- Debt-to-equity now stands at 20% - and management is clearly determined to keep debt levels and costs down. Remuneration levels are certainly not fancifull.
- A look at the financial performance pictorial displayed on page 12 and the tabulation on page 13 of the Annual Report shows how LHT has grown over the last five years - I was struck by the monotonic increase in NAV/S profile.
- In the management narrative there is an open non-defensive discussion regarding risks and how management intends mitigating such risks. Refreshing.
- Wooden pallets may not sound (or be) the sexiest business but LHT have worked a niche and their Wood Chips, Technical Wood and Tianjin new business activities bode well for the Company's growth.
- I find it striking that this tiny company has over 5,400 shareholders. I am vested in Companies five times the market cap with less than 30% this number of shareholders. Obviously many of these 5,400+ shareholders are employees and family of employees (and as anyone who has read the last couple of pages of the last Financial Report will know, they certainly employ more than a few Yap's and Neo's - relatives of Directors) but I believe such a wide shareholder base is very much a positive. Kingsmen, for example, has 1,150 odd shareholders.
- I have heard some criticism that LHT's CEO doesn't speak English. To my mind this is totally irrelevant - if I had insisted on an English speaking chef I would have starved many times over. CEO Neo comes across as a customer-focused man who's always looking for the cost saving and wants to bring costs to heel.

I am biased. I am vested. And I am pleased with LHT's share price performance over recent months (not just over recent days). But I believe this counter and its management has some "Kingsmen-esqe" type qualities about it and the share price has further upside - and I believe the recent share price run-up is fully justified. In fact I contend the answer to the highly pertinent question dydx poses in the prior posting on this thread: QUOTE Rationally speaking, a well-established, profitable and financially healthy business should be worth more than its NAV, shouldn't it? UNQUOTE should be in LHT's case a resounding "yes".

I do wish the non-execs would show somewhat more commitment to LHT's cause by owning more than a measly 40,000 shares between them - Non Exec Dr. Wu is consistent - he still does not own a single LHT share.

Vested (yes, I know I said it before).

[kevin]

Hi,

I just read through LHT's 2011 annual report and one thing in particular stood out. I find the average age of its receivables slightly worrying. Just a simple calculation of Net AR/Sales x 365 days and you will get 81 days which i find is quite long to collect its AR. Looking at the aging of its receivables you will see that more than half of its receivables are overdue. Maybe im just being paranoid here but I'm just curious how the company is funding its operations because it seems to be generating positive cash flow from its operations. Anyone has any opinion on this?

[RBM]

Last Thursday, Executive Director Yap purchased a further 40,000 LHT shares - this time at a price of S$ 0.142, her highest purchase price yet. By chance, I was monitoring LHT's bids and offers on Thursday morning (the "R" in "RBM" stands for "Retired"!) - and this 40,000 purchase came out of one single 400,000 share bid - so I believe that ED Yap did not get all the units that she wanted on Thursday!

Based on the 2010 and 2011 Annual Reports Ms. Yap purchased 2,187,000 LHT shares between mid-March 2011 and mid-March 2012; just over 1% of LHT's total 212,980,000 share base. Given that her disclosed LHT earnings were < S$ 250,000 p.a., this means ED Yap put the lions share of her LHT income into LHT shares, even if it is assumed that she was able to pick up many of her acquired LHT units in the single-digits-cents range ....... sometimes we forget that LHT traded below 7 cents for a short while last year.

Since 14th March 2012, when the Top 20 Shareholders list was compiled, ED Yap has purchased a further 266,000 shares, taking her total LHT holding to a smidgen under 11.4%.

I hope the above three paragraphs (again) demonstrate how committed ED Yap is to LHT's cause and how confident she is in LHT's future prospects. I wish more Executive Directors in other listed companies would demonstrate this kind of shareholder-confidence-building approach.

Also interesting to note that during the same mid-March 2011 to mid-March 2012 period, Billy Neo - Manager of LHT's Overseas Market Development section and son of LHT Chairman & MD Neo Koon Boo - purchased a further 931,000 LHT shares or 0.44% of the company. These purchases were not subject to SGX disclosure. Another demonstration of commitment and confidence. Another positive.

dydx has used the term "tightly held" when referring to LHT's share base in his postings on this VB thread. To demonstrate how spot-on dydx's observation is ........
- 18 of LHT's Top 20 shareholders are the same this year as last year. Of these 18, only one - a nominee account - reduced their holding by a tad. Most maintained their LHT holding and a few, Yap's and Neo's included, increased their holding. This during a not unturbulent year in the markets. I also quickly looked at LHT's 2009 Annual report - 17 of the Top 20 Shareholders then remain on the Top 20 List today.
- Of the Top 9 LHT shareholders, 8 maintained their holding as is. The exception was Ms. Yap, the 3rd largest shareholder, who increased her holding as above.
- The Top 20 shareholders hold > 77% of LHT's shares and ~ 36% is in public hands. I suspect that more than a few LHT staff own modest holdings and they'll likely wish to retain these holdings while they remain on LHT's payroll.

Tightly held indeed.

Kevin - your pushback on receivables levels and ageing is a very good and pertinent comment. Thank you. I'm digging and waiting on a response from LHT.

Vested.

[dydx]

ED Ms Yap has restarted to buy more LHT shares from the open-market.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument [15May12 purchase]
http://info.sgx.com/webcorannc.nsf/Annou...endocument [10May12 purchase]

[CityFarmer]

One of the highly admired skill of dydx is able to spot interesting stocks. I had gotten endless of interesting stocks by reading dydx postings.

My watch-list is growing fast.

My hope one day, I can become close to dydx level of skill in isolating interesting stocks out of thousands of stocks available (is it thousands in SGX?)

Needless to say, one of them is LHT

[CityFarmer]

Hi,

I just read through LHT's 2011 annual report and one thing in particular stood out. I find the average age of its receivables slightly worrying. Just a simple calculation of Net AR/Sales x 365 days and you will get 81 days which i find is quite long to collect its AR. Looking at the aging of its receivables you will see that more than half of its receivables are overdue. Maybe im just being paranoid here but I'm just curious how the company is funding its operations because it seems to be generating positive cash flow from its operations. Anyone has any opinion on this?

I will use the average receivable to calculate receivable turnover. The result is ~73 days. The typical manufacturing companies have similar performance, so I am not particularly concern.

We can also look at the allowance for doubtful trade receivable (page 52). The allowance allocated is 7.5% of the receivable amount, but the actual write-off is only 1%. IMO, it is been conservatively managed and the actual write-off is acceptable.