Mun Siong Engineering

[heifien91]

Thanks for your encouragement. I guess it would really depend on the investing style for the entire portfolio and I am more suited as a Graham/Schloss kind of guy instead of Buffett/Fisher.

On that note, perhaps you could advise me on how to go about retrieving such information of understanding like why comparing between Mun Siong and Kori Holdings, Mun Siong is a much more asset-heavy business? Can such information be derived from the AR or one would have to go through the IR channel?

Thanks!

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

[valuebuddies]

Many great names in SGX are traded ways above the NAV, eg. Starhub which is near 80, Singapore Exchange, M1, ARA, ShengShiong and many more are beyond 5x PTB. I seldom value a company based on its NAV unless it is a pure hard assets investments, like reits.

I think it may not be appropriate to compare Mun Siong and Kori, in which the earlier focus mainly on mechanical engineering while the later more in steel works. I need to admit that I do not know much about Kori, but it seems that Kori's business depending much on labour and inventories while Mun Siong relies much on machineries. This can be explained as to why (i) Kori has greater amount of AP despite lower revenue; and (ii) Kori's plant and machinery is cost merely 300k and almost fully depreciated.

[specuvestor]

Hi Heifen

You can ask via IR who are their peers and why their Capex is higher than Kori (and they might just revert to you that they are not comparable and why), read the respective AR, attend the AGMs/ EGM and quarterly meetings etc.

Personally I find that understanding the business is more important than the results ie the numbers because usually things change at the business level before it becomes translated into numbers. That's the diff between finance guys who are concern about the future, and accounting guys who are concerned about the past My 2 cents

[valuebuddies]

Q3 2014 results is out:

http://infopub.sgx.com/FileOpen/MSE-ANN-...eID=323539

Comparing Q/Q, revenue down 9% but GPM improved from 7.7% to 11.5%, end result profit of 471k versus last year -ve 23k. GPM has been stable over the past 9 months at 11.5%, but increased in the administrative fee and reduction in other income resulting in Q3 EPS at 0.1c versus 0.42c for 1H 2014. Based on 0.1c EPS per Q, the PE ratio works out to be 16 times which is rather high.

At end of Q3 2014, order book stood at 16.4M (Q2: 14.5M / Q1: 19.2M)

Lastly, management's outlook is "not positive":

The recent steep decline in crude oil prices, the imminent interest rates hikes in North America and uncertainty in the health of the Chinese economy may have negative impact on the Group’s profitability.

The demand of the end products that are manufactured or stored at the facilities that the Group services is reliance on the state of major global economies such as Europe, North America,

China and Asia. In the event of a slowdown or volatility in these economies (for example due to weaknesses in consumptions or increase in borrowing cost due to increase in interest rates), the upgrading of existing facilities or construction of new facilities would be deferred or cancelled. Under such circumstances, the Group profitability would be negatively affected.

[dydx]

I like the conservative way the Executive Chairman Ms Cheng Woei Fen has been positioning and running Mun Siong's business in a last 18 months, in the face of tightening supply of foreign labour and rising labour and related costs.

Against the latest (30Sep14) NAV/share of $0.1238, the current share price at only the $0.07 level is pointing to a clear grossly under-priced situation for a business already showing reliable signs of profit recovery, even after considering the expected conversion of the issued 165.7m in-the-money warrants into new Mun Siong shares at $0.01/share.

I look forward to the anticipated much improved full-year FY14 results expected by end-Feb15, and the usual final dividend.

[dydx]

Interestingly, Mun Siong has inched by about 5% since my last post on 10Nov to reach $0.074 today.

[pianist]

Last result I saw some rights have been converted into shares. I tot these rights can only be exercised or converted on the exercise date th[img]http://[/img]ree years later?

[dydx]

Mun Siong hit and closed at $0.081 yesterday. This is a new high after the completion of the 4-for-10 rights issue of 3-year warrants - convertible into new Mun Siong shares at $0.01 - recently.

As indicated by the daily buy/sell queues, sellers at the current price level remain few.

[pianist]

Cdp never reply, but does anyone know how to exercise the rights now

[valuebuddies]

3 years is the time frame to exercise the right, if you don't do it within 3 years, your rights will be expired and become worthless. Should you need to exercise your right, just call your broker lo. Mine using SCB, enquired before and was told that it takes approx a week time for converting rights to shares.