Mun Siong Engineering

[SLC81]

Did anyone manage to get allocated warrants and excess ? I applied but still don't see any warrants in my cdp account (should be due in 3rd sep ?)

[dydx]

The warrant issue was 7.3 times subscribed.....
http://infopub.sgx.com/FileOpen/MSE-2014...eID=314277

[valuebuddies]

Though the allocation method is beyond our prediction or projection, but based on merely 94.37% valid acceptance, those of us who applied significantly in the excess would have a high chance of getting a meaningful quantities. Out of the invalid or non acceptance of 5.63%, assuming a conservative 0.63% (ie. no. shareholders x maximum no. of rounding = 1326 x 800) were for rounding up the odd lots, the balance of 5% (ie. 8.3m warrants) are available for excess allocation, which represents approximately 0.78% of the total excess application.

Assuming one, who owned 1 lot of share CR, applied excess amounting to S$10,000 (ie. 10M warrants), he/she might be allotted with 78k of warrants, which is valued at S$4,524 based on current underlying price. 45% return over a short period of 1 month.

Seems unbelievable, anything wrong with my calculations? Anyway my prediction can be very far from the actual facts, tomorrow is the issuance date, and we will know.

[edwin]

Though the allocation method is beyond our prediction or projection, but based on merely 94.37% valid acceptance, those of us who applied significantly in the excess would have a high chance of getting a meaningful quantities. Out of the invalid or non acceptance of 5.63%, assuming a conservative 0.63% (ie. no. shareholders x maximum no. of rounding = 1326 x 800) were for rounding up the odd lots, the balance of 5% (ie. 8.3m warrants) are available for excess allocation, which represents approximately 0.78% of the total excess application.

Assuming one, who owned 1 lot of share CR, applied excess amounting to S$10,000 (ie. 10M warrants), he/she might be allotted with 78k of warrants, which is valued at S$4,524 based on current underlying price. 45% return over a short period of 1 month.

Seems unbelievable, anything wrong with my calculations? Anyway my prediction can be very far from the actual facts, tomorrow is the issuance date, and we will know.

for ols right issues....if u got 1 lot of mother share and u apply.1000 lots excess....they will.allocate 1 lot excess to u....but if u got 500 lots mother share and.apply 500lots.excess...they allocate 100 lots excess to u....

[valuebuddies]

Sianz, called SCB on Friday and today still no outcome, will find out only tomorrow. Those who bought via CDP, what's your allocation ratio?

[heifien91]

Sorry don't exactly know if I am interpreting the graphs correctly but the price of Mun Siong dropped by approximately 50% after the book closure for the issue of warrants?

(not vested)

[dydx]

Today (29Sep14), Mun Siong's mother share closed at $0.065, and the newly-listed company warrants W170908 (arising from the recently completed 4-for-10 rights issue of warrants priced at $0.0015/warrant) - each warrant is convertible into a new mother share at a conversion price of $0.01/warrant, i.e. the warrants have been designed to be 'in-the-money' throughout its 3-year life, unless Mun Siong's mother share price falls below $0.01 - closed at $0.057…..
http://www.valuebuddies.com/thread-5367-...l#pid93983

Based on the latest outstanding issued 416.708m mother shares and 166.68m warrants W170908, Mun Siong's current total market cap stands at only $36.587m, vs. the latest (as at 30Jun14) NAV at $51.166m - translating to a NAV/share of $0.1228 (before accounting for the dilutive impact of the company warrants)…..
http://infopub.sgx.com/FileOpen/MSE-2014...eID=308884

And based on the closing share price of $0.115 on 12Aug14 (the last trading day before Mun Siong went 'XR' for the rights issue of warrants), Mun Siong's market cap. on 12Aug14 was $47.887m. So instead of enhancing shareholders' value, the rights issue has actually caused Mun Siong's market cap. to have fallen by some 24%! It appears that Mr Market could be grossly under-pricing Mun Siong now, or is Mr Market still trying to learn how to price Mun Siong correctly incorporating the newly listed warrants?

[dydx]

I am a little surprised that the New York based value-investing website ValueWalk.com has on 26Sep14 posted quite a detailed report on Mun Siong entitled "Mun Siong Engineering Ltd: A Compelling Valuation Story"…..
http://www.valuewalk.com/2014/09/mun-sio...ering-ltd/

In the report, the authors highlighted that as at 30Jun14, Mun Siong had a NCAV (i.e. Net Current Asset Value = Current Assets - Total Liabilities) /share of $0.071, and a Revised (i.e. including the total proceeds of and assuming the full conversion of the 166.683m warrants) NCAV/share of $0.056. The authors also provided their Fair Value estimate - again assuming full conversion of the 166.683m warrants - of the Mun Siong share at $0.09.

My own simple view is that the authors's Fair Value estimate of the Mun Siong share at $0.09 is too conservative and quite unrealistic. Just based on asset coverage and Mun Siong's latest (as at 30Jun14) NAV/share of $0.1228, the revised NAV/share (including the total proceeds of and assuming the full conversion of the 166.683m warrants) is already $0.091. And this is before considering any further business growth, any future earnings, and the recovery of Mun Siong's profitability underway as suggested by substantially higher NP in 1H ended 30Jun14.

Isn't a Fair Value including a fair premium over the revised NAV/share of $0.091 more appropriate for Mun Siong's well-established business?

[heifien91]

Hi dydx,

Believe I would be best to answer this question since I am the author of the article which first appeared on my site The Value Edge haha.

That aside, how I derived fair value was based on p/b of 1x. Given that how I was screening for net-net companies, this stock appeared. However, after factoring for the warrants, it significantly reduced the mos as stated in the article basing on a p/b of 1x. Of course, I understand that using a p/b of 1.0 is an extremely conservative level. However, usually with net-nets, I would sell off the stock when the company is trading at a p/b value of 1x.

Indeed, if value based on earnings multiple, mun siong may be a more attractive investment. However, given how the screening was based on assets multiples, I kept it at how it seemed really attractive initially, was not as attractive after factoring for the warrants. That said, I will bear it in mind to be clearer in my conclusion for future write-ups. Thanks.

(not vested)

I am a little surprised that the New York based value-investing website ValueWalk.com has on 26Sep14 posted quite a detailed report on Mun Siong entitled "Mun Siong Engineering Ltd: A Compelling Valuation Story"…..
http://www.valuewalk.com/2014/09/mun-sio...ering-ltd/

In the report, the authors highlighted that as at 30Jun14, Mun Siong had a NCAV (i.e. Net Current Asset Value = Current Assets - Total Liabilities) /share of $0.071, and a Revised (i.e. including the total proceeds of and assuming the full conversion of the 166.683m warrants) NCAV/share of $0.056. The authors also provided their Fair Value estimate - again assuming full conversion of the 166.683m warrants - of the Mun Siong share at $0.09.

My own simple view is that the authors's Fair Value estimate of the Mun Siong share at $0.09 is too conservative and quite unrealistic. Just based on asset coverage and Mun Siong's latest (as at 30Jun14) NAV/share of $0.1228, the revised NAV/share (including the total proceeds of and assuming the full conversion of the 166.683m warrants) is already $0.091. And this is before considering any further business growth, any future earnings, and the recovery of Mun Siong's profitability underway as suggested by substantially higher NP in 1H ended 30Jun14.

Isn't a Fair Value including a fair premium over the revised NAV/share of $0.091 more appropriate for Mun Siong's well-established business?

[specuvestor]

Nice write up Personally I would encourage you to find out more about their business model, for example why they have higher capex and assets than their competitors in similar business

Just a point to note on section III that gearing does not explains for lower ROA