Uni-asia Group (formerly: Uni-asia Finance)

[Zelphon]

Hi Guys

Came across this company today...

IPO in 2007 Aug at S$0.55
Current NAV = US$0.35
Current Price = S$ 0.28

Jap company deals with shipping financing; Hotel biz in Jap; and various alternative investment...

Seems to be a financing company on a whole...

It is starting to turn around since the shipping crisis and credit crunch in 2008, 2009 period...
Making profit for the latest 3 quarters..

What do you guys think?
Could this be a good turn-around play with a wide safety margin?

[Nick]

It certainly looks like an interesting company dealing with asset management, ship leasing and hotel investments. The website is quite informative and the have quarterly presentations uploaded in their website. But such business tend to be pretty stable and have a pretty high margin (especially leasing) so why did they report a loss and negative operating cash-flow in FY 2009 ? I think they have a well diversified fleet of small vessels - who are their counter-parties ? Are they still operating ? The fee income looks too little.

[Zelphon]

It certainly looks like an interesting company dealing with asset management, ship leasing and hotel investments. The website is quite informative and the have quarterly presentations uploaded in their website. But such business tend to be pretty stable and have a pretty high margin (especially leasing) so why did they report a loss and negative operating cash-flow in FY 2009 ? I think they have a well diversified fleet of small vessels - who are their counter-parties ? Are they still operating ? The fee income looks too little.

Half their fleets is chartered to EverGreen (i.e. All containers)...
Lease till 2014 minimum for the containers..

I still do not understand how their biz works..
Especially in the area of financing..

But the past 3 quarters results looks good..
Can see sign of improvement..

Seems like the bulk of the loss is due to revaluation of the ships and properties..
Loss in fee income due to credit crunch during that period..

Since most banks unwilling to lend, the company is unable to secure re-financing projects?

Seems also to be a project-management based company..
They secure projects and charge the fees for managing and completing the projects..

They also create investment funds too..

[Nick]

Hi Zelphon,

I am generally quite interested in companies dealing with long term leasing/recurring O&M jobs since they might pay a decent dividend in the long run. However, as I looked at its 3Q 2010 statements, I noticed that it has generated 0 charter income for 9M 10 despite owning a huge fleet of vessels ? This in turn has resulted in a sharp drop in revenue as opposed to the previous year. Is there any explanation for this ?

Thanks

[Zelphon]

Hi Zelphon,

I am generally quite interested in companies dealing with long term leasing/recurring O&M jobs since they might pay a decent dividend in the long run. However, as I looked at its 3Q 2010 statements, I noticed that it has generated 0 charter income for 9M 10 despite owning a huge fleet of vessels ? This in turn has resulted in a sharp drop in revenue as opposed to the previous year. Is there any explanation for this ?

Thanks

A bit messy...

Answers can be found in pg 10.

Basically, the group disposed of 50% of a wholly owned shipping subsidiary and thus no longer consolidated the assets and liabilities of the subsidiary under its financial statement.

Still the charter income should be reflected somewhere..
I am unable to find it...

[Nick]

Yea..very messy with all the disposal or restructuring made in the past 1.5 years. I guess it makes better sense to purchase a shipping trust ? At least their income seems more stable (and tax-free) and you get a share of the dividend. You are already vested in Rickmers Maritime Trust so do you plan to diversify into Uni-Asia while gaining exposure from its hotel and property business ?

[Zelphon]

Yea..very messy with all the disposal or restructuring made in the past 1.5 years. I guess it makes better sense to purchase a shipping trust ? At least their income seems more stable (and tax-free) and you get a share of the dividend. You are already vested in Rickmers Maritime Trust so do you plan to diversify into Uni-Asia while gaining exposure from its hotel and property business ?

Tempted to collect this and see...

Still holding onto Rickmers...
Rickmers is pretty stagnant though...

I am pondering whether to divest Rickmers and go into this..
I will still get exposure to shipping and gain additional exposure to Jap...

But then I am also vested in Saizen...

So far all my counters are deep discount to NAV..

Except my Mapletree Log...

[Nick]

Yea..very messy with all the disposal or restructuring made in the past 1.5 years. I guess it makes better sense to purchase a shipping trust ? At least their income seems more stable (and tax-free) and you get a share of the dividend. You are already vested in Rickmers Maritime Trust so do you plan to diversify into Uni-Asia while gaining exposure from its hotel and property business ?

Tempted to collect this and see...

Still holding onto Rickmers...
Rickmers is pretty stagnant though...

I am pondering whether to divest Rickmers and go into this..
I will still get exposure to shipping and gain additional exposure to Jap...

But then I am also vested in Saizen...

So far all my counters are deep discount to NAV..

Except my Mapletree Log...

Hi Zelphon,

I was a unit-holder of Rickmers Maritime for a quarter (short time) before divesting it very recently. I penned my reason for divestment here - http://www.valuebuddies.com/thread-156-p...ml#pid2203 - but it reflects my own views and need for portfolio balancing.

Personally, I don't think it is wise to jump into Uni-Asia especially when its business isn't very stable as compared to RMT. Its margins is terrible and it is generating negative operating cash-flow. RMT also has exposure to Evergreen (and a few other blue chip charterer) so it looks more like a step down if you are selling RMT to buy Uni-Asia just for its ship leasing exposure. I guess it has a much cleaner balance sheet though. Hotel-wise in Japan, I can't comment too much. IPC Corp has been purchasing business hotels in Japan this year so you may wish to see whether do they have similar margins and profitability. If you are looking for growth companies, I am certain you can find better ones out there. If you are looking for high yielding companies, then you have to be prepared for stagnating stocks. Rickmers won't be flying anywhere for the next few years unless they refinance their loans successfully. But as long as you are getting your dividends, why worry about share price being stucked ?

Cheers !

[Nick]

Uni-Asia is acquiring a new-build 37,000 DWT Handymax bulk carrier for US$33 million. The vessel will be delivered in 2013 and the Management will secure a long term charter for the vessel before delivery.

http://uniasia.listedcompany.com/newsroo...324A.1.pdf

(Not Vested)

[Curiousparty]

In the recent Edge article, CFO said that the company is gunning for a more than 7-times increase in net profit fro, US$1.4mil in 2012 to US$10mi a year. Not sure by when...

Not sure if he is over-promising...

IPO - 55 cents
Highest to date - $2.50
Now - 18.3 cents

NAV - 29 cents (USD)