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This is probably one of cheapest turnaround stock with decent financials.
The motor sales & distribution business has impressed with a turnaround in the last 3 years.
Cash is now $8M at end FY14, and Retained Earnings 22M.
For its last FY14, its profit before tax rose 33%, while sales was flat. The P&L for FY14 shows a > $20M loss because of the writing off of some dormant subsidiaries in MY and HK. This item is non-cash. And was incurred before the current management ran the company.
The company depends on products from ATB and Wolong Group. Wolong is probably the leader in motors in China. Wolong supplies the motors and provides interest free loan to LJ. LJ has repaid the loan till $5.9M at end FY14. The plan is to repay all the loan by 2016. THere is unlikely to dividends till loan is repaid.
For this FY, the company is planning to build more growth foundation in Asia Pacific.
From its financials, it has been selling more motors which it buys from Wolong but brand as Brook Crompton W series. THe W series is a lower margin motor that helps the company drive sales. Hence there is possibility of incremental growth in sales but a slightly lower margin.
The capex is minimal - $250K and $200K in FY14 and FY13. Hence there is good cash generation capability.
At NAV of 3.1 cts, PTB is 1.3 times.
Stock will get 20-1 consolidation so there could be punters who want to cash out.
The motor sales & distribution business has impressed with a turnaround in the last 3 years.
Cash is now $8M at end FY14, and Retained Earnings 22M.
For its last FY14, its profit before tax rose 33%, while sales was flat. The P&L for FY14 shows a > $20M loss because of the writing off of some dormant subsidiaries in MY and HK. This item is non-cash. And was incurred before the current management ran the company.
The company depends on products from ATB and Wolong Group. Wolong is probably the leader in motors in China. Wolong supplies the motors and provides interest free loan to LJ. LJ has repaid the loan till $5.9M at end FY14. The plan is to repay all the loan by 2016. THere is unlikely to dividends till loan is repaid.
For this FY, the company is planning to build more growth foundation in Asia Pacific.
From its financials, it has been selling more motors which it buys from Wolong but brand as Brook Crompton W series. THe W series is a lower margin motor that helps the company drive sales. Hence there is possibility of incremental growth in sales but a slightly lower margin.
The capex is minimal - $250K and $200K in FY14 and FY13. Hence there is good cash generation capability.
At NAV of 3.1 cts, PTB is 1.3 times.
Stock will get 20-1 consolidation so there could be punters who want to cash out.
