Valuetronics Holdings

[sgpunter]

Come ón guys, Lets give sgpunter a break. Also, lets turn this forum into one with meaningful insight and information rather than one just based on opinions (good or bad). If we want opinions, any uncle or auntie on the street can tell us, information/news/facts/insights are more valuable. Opinons are fine, but good to back it up with some facts or information.Otherwise, after a while valuebuddies will turn into a low grade forum that any investor will loathe to visit. Any comments from administrators?

Thanks nervesofsteel. I also fully agree with what you say. In fact, I'm not even opposed to mere opinions in a forum even cos hey, sometimes opinions can liven things up in a thread and it's merely an opinion right, caveat emptor after all.

I'm also really not bothered by the ignorant comments from people like foreveralone who don't seem to understand that it is possible to move markets based on forum postings especially with false and malicious rumours.

http://www.anplaw.com/wp-content/uploads...202008.pdf

For the last time, I just like to reiterate that I never said anyone's posts here based on what I read so far can move the market. My gripe was with someone who divested the stock and immediately after tried to generate baseless discussions linking the counter to S Chips and falsified cash balances. I have no issue if someone found some possible red flags and started posing questions in the forum for discussion. Anyway, he already admitted his intent in trying to generate the said discussion and I respect him for that. End of story.

I hope this is the end of this particular discussion and let's move on to more constructive posts. Thank you.

[Contrarian]

I was impressed enough by the CEO on the surface to visit This company I visited their plant a few years ago.

The company location is on an inner suburb of GZ province. And (at that time of visit) they employ many young workers (look like school leavers). The operation is not very highly automated.

He said (then) his top concern is the cost structure.

After I came back, I sold their shares. Was so glad I made this move.

[kopihothot]

Please double check my numbers hor. Hopefully this is helpful.

Div total = HKD0.646 over 7 years

Divide by HKD/SGD using 6.2 = S$0.104........at least this amount is definitely real and they IPO-ed at S$0.23 with a NTA of HKD0.47 (now HKD1.869).

And Philips's been with them since 2000......surely Philips has vetted their numbers and products, so their capability should be fairly good and their book can't be that faked.

VALUETRONICS HOLDINGS LIMITED DIVIDEND 01 Aug 2013 05 Aug 2013 16 Aug 2013 HKD 0.08
VALUETRONICS HOLDINGS LIMITED DIVIDEND 23 Jul 2012 25 Jul 2012 03 Aug 2012 HKD 0.16
VALUETRONICS HOLDINGS LIMITED DIVIDEND 23 Jul 2012 25 Jul 2012 03 Aug 2012 HKD 0.01
VALUETRONICS HOLDINGS LIMITED DIVIDEND 22 Jul 2011 26 Jul 2011 05 Aug 2011 HKD 0.14
VALUETRONICS HOLDINGS LIMITED DIVIDEND 29 Jul 2010 02 Aug 2010 13 Aug 2010 HKD 0.07
VALUETRONICS HOLDINGS LIMITED DIVIDEND 28 Jul 2009 30 Jul 2009 11 Aug 2009 HKD 0.045
VALUETRONICS HOLDINGS LIMITED DIVIDEND 04 Aug 2008 06 Aug 2008 18 Aug 2008 HKD 0.078
VALUETRONICS HOLDINGS LIMITED DIVIDEND 02 Aug 2007 06 Aug 2007 17 Aug 2007 HKD 0.063


from their IPO page 98-99:

The year 2000 was a major milestone in our development. We secured international brand names
“PHILIPS” and “DYMO” as our customers. In September 2000, we commenced production of mobile
phone chargers under the “PHILIPS” brand name.We also started production of “DYMO” label printers in
December 2000.

In 2000, the Philips Group requested that we extend our manufacturing services for the production of
“PHILIPS” consumer electronic goods intended for sale in the PRC. In response to their request and in
order to seize the potential for growth supported by the rapid increases in PRC domestic demand for
consumer electronic goods, we established HTE as a wholly foreign owned enterprise in the PRC in
September 2000 to handle the production of goods intended for PRC domestic sales. As a wholly foreign
owned enterprise, HTE is permitted to engage in production for both domestic as well as export sales.

[AlphaQuant]

Please double check my numbers hor. Hopefully this is helpful.
Div total = HKD0.646 over 7 years

PPE 2007= 24mio HKD
PPE 2013 = 196mio HKD

IPO raised 20.47 mio SGD (89mio shares @ 0.23 SGD) so ard 100mio HKD based on sgdhkd rate in 2007 - we can trust this cash.

since IPO they paid 0.646*360mio= 233mio HKD of dividends (according to kopihothot), but since the top 3 blokes own 45% of the firm, the outlay to outsiders = 0.55*233= 128mio HKD - we can trust this cash.

There was no placement nor rights (so no further inflow of cash).

So from the pov of the founding blokes, they IPO'd the firm and took 100mio HKD equi of cash, and for the next 7 years, paid out 233mio HKD of cash as dividends, of which 105mio went back to them, and 128mio went to outside people.

So there must be some genuine cashflow inwards since 233>100 and more importantly 128(money paid to strangers)>100(money took from strangers) unless it is funded by borrowings (which they don't have) , sale of some assets (which did not appear - since there was further outflow of cash to other people for PPE) or their own pockets (err...)

Since 2007, they claimed to make > 500mio HKD of profit of which 172mio went into PPE.

100(IPO)+500(profits)-172(ppe)-233(dividends)= 195 (so roughly what is the cash balance as of 2013).

Hard to ever prove a fraud before a fraud, but the trust-worthy cash (i.e. IPO money+dividends) has shown that they did not IPO the firm and then ran away with the cash. In fact they paid more than what they took. Whether the cash balance is real is another matter - but so far the numbers seem to add up - a further reality check will be whether as an investor you think the bloke can make the claimed 500mio in 7years in the particular industry.

PS: i have no vested interest - this is just an exercise for my own sake to practice fraud-spotting skills.

[GFG]

I was impressed enough by the CEO on the surface to visit This company I visited their plant a few years ago.

The company location is on an inner suburb of GZ province. And (at that time of visit) they employ many young workers (look like school leavers). The operation is not very highly automated.

He said (then) his top concern is the cost structure.

After I came back, I sold their shares. Was so glad I made this move.

Hi, can you please share why you are glad you have sold their shares?
Operations not being highly automated/employing young workers etc dont seem like anything that's mega negative. If anything, you could even look at the other side of the coin and consider that they could cut their manpower costs now by automating more.
The share price has also risen, so why would you be glad you have sold their shares a few years back? What are the negatives that you have seen then and how have they panned out?

Can I also ask how did you visit their plant? I would assume not anyone could just visit on their own.

[nervesofsteel]

Wonder if valuetronics is a steal or value trap?Tough to believe it is trading at current price.

1) Valuetronics has a decent yield
2) extremely low valuations at 4.5 times forward PE, ROE upwards of 20%
3) High cash per share ($0.18).If you take cash away, it only needs two years of current earnings and the business comes FOC.
4) Super strong free cash flows in recent years
5) Improving margins in the past 7 quarters
6) Philips have been reporting super strong growth LED sales
7) Trading below NAV. And NAV comprises majority cash and the rest are receivables/inventories. If we take Philips as a majority( above 50% of rev) customer, these receivables/inventories value should be solid.Hence NAV is a solid figure.

any negatives that i might have missed?Other than mgmt giving themselves cheap stock options(not yet vested)

[GFG]

Wonder if valuetronics is a steal or value trap?Tough to believe it is trading at current price.

1) Valuetronics has a decent yield
2) extremely low valuations at 4.5 times forward PE, ROE upwards of 20%
3) High cash per share ($0.18).If you take cash away, it only needs two years of current earnings and the business comes FOC.
4) Super strong free cash flows in recent years
5) Improving margins in the past 7 quarters
6) Philips have been reporting super strong growth LED sales
7) Trading below NAV. And NAV comprises majority cash and the rest are receivables/inventories. If we take Philips as a majority( above 50% of rev) customer, these receivables/inventories value should be solid.Hence NAV is a solid figure.

any negatives that i might have missed?Other than mgmt giving themselves cheap stock options(not yet vested)

1) Yield is more than just decent. If you bought it just a few months ago, i think yield can hit double digits.
2) ROE for the past 5 years from 2009 are:
16.41%
15.68%
25.50%
22.90%
13.29%
Not exactly upwards of 20% consistently
4) Free cash flows for last 4 yrs are (in '000):
1,095
-35,521
195,268
41,248
5) I dont look at q-o-q but on an annual basis:
GPM for the past 6 years are:
20.59%
17.40%
15.61%
15.72%
14.04%
12.23%
Its not improving but actually decreasing GPM instead.
6) Yes certainly. Bear in mind though that Philips uses more than 1 manufacturer, but sure, it definitely does help if your client account for >50% of revenues does well
7) NTA is 186.9 HK cents (approximately 29.9 SG cents)
Current price is between 28 - 29 cents, so it is trading at just very slightly below NTA.
However, there are a bunch of share options with exercise prices way below the current market price. So I would actually take into account this dilutive effect. Adding in the options, the NTA then becomes 178.2 HK cents (28.5 SG cents)
So i pretty much consider it as near to NTA currently.
That's a more conservative calculation.

<vested 700lots>

[wahkao]

how do u guys know its customer is Philips? where is it written?
i dont think companies will reveal their customers right?

[GFG]

how do u guys know its customer is Philips? where is it written?
i dont think companies will reveal their customers right?

Yes, they dont normally reveal their customers. I asked their IR about their major customers just a few mths back, they declined to reveal names but did reveal that their top clients have been clients for the past 7 yrs. So it does mean there is stability in earnings. I asked cos I am interested to know if there's some competitive advantage, i.e. it is not that easy for clients to switch from 1 manufacturer to another. So to a certain extent there is some pricing power.

As for Philips accounting for 70% of revenue, I think the management mentioned it a few yrs back in one of the AGMs. Its also in an old analyst report by OCBC i think.

Current share price is about $0.325. Has hit my target price of $0.33 (I mentioned in earlier posts) but I am still holding on to it for now.
Waiting for the full yr financials first, which should be coming up in 2 mths

[dzwm87]

Mgmt disclosed on an Edge article before. There are sell side reports that mentioned it too. Anyway, Valuetronics is not a major but only one of their many suppliers.