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11-02-2014, 11:26 PM
(This post was last modified: 11-02-2014, 11:29 PM by felixleong.)
(11-02-2014, 10:15 PM)CY09 Wrote: (11-02-2014, 09:58 PM)InvestArk Wrote: (11-02-2014, 05:00 PM)felixleong Wrote: Valuetronics historically trades between 4 to 8 times earnings, so i tend to value it more towards its dividend payout and nav. Using dividend yield and nav, it looks fairly price but reasonable for me. Hold or sell is fine but at this price better to not buy anymore.
Thank you for the explanation.
Valutronics tends to give approx 40% as pay-out ratio. Assuming a conservative full year 6 cents EPS, aren't it a bit short-changing yourself selling the counter with the capability of yielding 2.4 cents?
I think holding for the dividend yield is fine, worst case if give 2cents also around 7% yield. if they pay 2.4 cents that's about 8% which is pretty juicy ^^
Just that at the current price is confirm a lot less margin of safety when we were looking and talking about it at 20cents level.
when it was priced at 20 cents there was like 50% margin of safety, which was a really good deal!
given its latest results, what do u think is the fair value for valuetronics base on your analysis?
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Like you said, VALUE historically trades at an average of 6x earnings. On a quarterly trend, their turnaround really began at around 4Q FY13 after they had recognized all impairment charges from their license business in 3Q FY13. In terms of the attractive headline growth, this quarter is effectively the last where their prior year base is small. But even if we assume flat for 4Q FY14, they will still be able to achieve a FY earnings of HKD141mln which translate into 4.6x P/E which means another ~30% upside for a company which trades at an average 6x.
Potential dividend yield could also be high as per what CY09 mentioned. If revert to 40% payout, it is a 9% yield. Even if they maintain on FY13 low of 29%, it will be a 6% yield. Decent enough.
Their net cash is also huge which means EV is drastically low. The beauty of a strong net cash business is that when market cap falls by 10%, your EV falls by much more: ~24% for VALUE case. So even if share price falls, you are getting the company even cheaper if you think they can maintain their margin. Isn't it a little too early to sell?
"Criticism is the fertilizer of learning." - Sir John Templeton
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12-02-2014, 08:58 PM
(This post was last modified: 12-02-2014, 08:59 PM by felixleong.)
and when it was selling for 20 cents few people bothered to research it and buy it ^^
now many small cap stocks have rallied, hard to find such great bargains again
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Bet Valuetronics & Karin, both of which reported contrasting results, what do you all think is a better buy at current valuations?
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The cash holding booms from HK$288M to HK$402M. That will be around HK 110c, or S$0.176 per share. Conpare this amount to the NAV of 186.9c, it is more than 50%! At current price of 29c, still 60% is made up of pure cash. Does a business that earns SG 6.4c per share only worth 11.4c per share?
In all aspect, including those mentioned before by other forumers, its still look undervalue to me.
Continue to hold.
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I bought this counter at 20 cents last aug after I studied the first quarter report. However, at current price of 28, I still think it has not reach its full potential. Anyone has a target price for Valuetronics? I am expecting dividends of at least 3 cents this year with the cash pile they are holding.
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