Valuetronics Holdings

[NTL]

To be fair to analyst, KimEng did not publish any report since they ceased cover in mar2012.

Not vested.

As VI, we should blame ourselves instead of other.

Analyst report is good for reference and not a call for buy/sell. Read their disclaimer.

BTW, KimEng does not published any report in the beginning of 2014. They initiate Sell call on 13Oct2014. Probably you are referring to PhilipCapital bull call.

Wow, just july this year Kim Eng made a buy call at 61cts. Now become sell at 25 cts. I think the analyst should be sacked.

I should have indicate I am not vested. As VI, I still think the analyst should be sacked or at least condemned in the company. Maybe we should consolidate a list of all analyst names who made bullshit flip-flop buy/sell tgt calls in short period of time.

I made the comment from Post #283. Repost the link to NextInsight website which mention Kim Eng as below:

http://www.nextinsight.net/index.php/sto...9x-ex-cash

The forumer posted it on July 2014. Maybe the report was very outdated.

This report is not outdated. It mentioned the dividend policy which was only announced in the FY13 final announcement. Question is the authenicity of the report, which I cannot verify as I don't have a KimEng acct.

Anyway, July report was supposed to be written by Lai Gene Lih, and October report is by Throng Thanh Hang. They may be working for the same company, but having
opposing view.

[NTL]

I just sold out all my 700 lots yesterday and today at prices between $0.365 - $0.375
Valuetronics has been a good investment for me, with a return of approximately 52% in less than a year.

Reason for selling out is that it has hit my target price, and that the hype means it is no longer cheaply valued.
Will have to find better areas to reinvest the proceeds.

Good luck for the FY14Q4.
I think the dividends will be at least 13 HK cents.
Based on an approximate 40% payout

A nice 50% profit to you. Congrats!

Just to add a little of my opinion. I feel that the hype just started. There will be more upside to come. If the result turn out to be expected, i.e EPS of 40 HK cents, dividend of 16 HK cents, the share price can likely hit 40c or more. Even at 40c, the PE is still less than 4 ex cash, and a decent yield of 6.4%.

Hopefully they will declare a special dividend to rewards their loyal followers.

The wonders of the stock market. I bought and sold at $0.37 at what I thought was a very good profit. As mentioned earlier, I thought it was no longer cheaply valued at my exit price. On hindsight, other VBs who mentioned about more upside to come were right, but IMO, the valuations didnt support that.
There's no way of deciding how far more it rose from my exit.
Just a short few mths since then, now it has crashed to even below my exit.

The fall in price is not due to valuation, but due to the possibility of Philips selling off their Lighting business, and the possible impact on Valuetronics. In all the previous discussion, this event had not known to me then.

For now, yes, this uncertainty is certainly weighing down on the future of Valuetronics. So, what should be the value for Valuetronics IF they really lost the entire lighting business? 25c as mentioned by Kim Eng?

I consider that part of valuation; not quantitative perhaps, but definitely qualitative valuation
It's precisely the weak moat that valuetronics has, that warrants a wide MOS.
When I sold out at 0.37-0.38, the valuations quantitatively were still pretty cheap, but taking into account valuetronics is in a business where it's just simply difficult to get much of a moat, the valuations can't just be cheap. Many manufacturers are cheap and remain so indefinitely
Looking at the economics of the business, the price can't just be cheap, it has to be ridiculously cheap. IMO, once it starts looking just cheap, it becomes a mediocre investment. As WB said, an average company at a great price can be a gd investment, the reverse is true as well
Even if Philips sells out, I don't think they will cut off valuetronics as a manufacturer immediately. The new owners, as with any acquisition, will look at their revenue and costs and prob try to squeeze their margins further

Having read the KimEng report once more, and google for more information, the report seems more of a speculative nature than true analysis. They are just splitting into 2 entities.The CEO was saying that the new Lighting entity may get debt investors (sell?) or listed separately to gain access to the capital market. Many companies did that so that each entity can focus on their own area. Whether this is good or bad for Philips, or Valuetronics, is really a very long term thing.

[LLS]

NTL u still holding on to valuetronics? or have sold out too?

[l0nEr]

Having read the KimEng report once more, and google for more information, the report seems more of a speculative nature than true analysis. They are just splitting into 2 entities.The CEO was saying that the new Lighting entity may get debt investors (sell?) or listed separately to gain access to the capital market. Many companies did that so that each entity can focus on their own area. Whether this is good or bad for Philips, or Valuetronics, is really a very long term thing.

Actually, i do agree with you. The KimEng report seems to imply firstly that when there's a spin off, it must be because of bad reasons. but that is obviously not the case, many spin-off have done well like Phillip 66.
Secondly, when there is a spin-off the suppliers will lose their contracts/customers. Huh, this is a spin off not a shut down, the revenue won't disappear, at least not immediately.
That said, market is always right.

[LLS]

valuetronics got sold down to 30 cents today, hope u guys not holding to it
currently its trading at 1 times book value which I feel is fairly priced

this could an attractive buy if it comes down to 20 cents
which is 30% discount to book and 1 times cash value

cheers ^^

[Ray168]

Alternative view from LIM & TAN (15 Oct 2014)


Valuetronics (32 cents, down 6 cents) fell 6 cents or 16% yesterday on 26.3mln shares traded on the back of a “Sell” report by Maybank KE issued yesterday. (The broker’s target price was 25 cents).

Maybank KE’s concerns are not new, having been raised by us in Sept’14 when we downgraded our call on the stock to HOLD. Specifi cally, it is about the re-structuring of one of their major consumer electronics customer as a result of the weakness suffered by their lighting division.

This in turn is caused by intense competitive pressures from lower cost producers in China.

While the above may be true and was the reason for the lower than expected performance in 1Q ended June’14, we fi nd the “zero value” being accorded to this division a bit overly-pessimistic by Maybank KEgiven that Valuetronics’ management has always focused on bottomline more than top-line and if this division were to indeed by loss making, they would not continue doing it.

And given that they have foreseen this happening some-time ago, Valuetronics’ management has already targeted the ICE business which focuses more on industrial and commercial products to help mitigate the slowdown in the consumer electronics business. The ICE business is also contributing close to 40% of profi t from nothing a few years ago when they first started.

Given that the ICE business is a higher margin business compared to the consumer electronics business, we believe the ICE business will be able to help mitigate the slowdown from the consumer business and on a net basis should allow the company to report fl attish performance.

With the sharp sell-down in share price, Valuetronics’ current market cap of $120mln is 60% backed by its net cash position of S$72mln. Trailing PE is 4.8x while EV/EBITDA is only 1.2x. If it slashes dividends by 40% this year (which is extreme), its forward yield would still be an attractive 6+%. (Forward yield is 10% if it maintains it at 3.2 cents a share).

We would look to Accumulate on further weakness (if it goes to 30 cents or below), up from HOLD previously.


Note vested, but interested.

[BlueKelah]

Sounds good fundamenrally, but is there any MOS at current share price??

via Xperia Z1 with Android 4.4.4 tapatalk.

[GFG]

As mentioned way earlier in this forum, I am also generally uncomfortable with share option remuneration with immediate vesting periods, and with management selling out almost instantly upon vesting. The rationale for using share options as remuneration is to have management interests tied in with common shareholders, but if the vesting period is immediate, the price is at the market price or lower, and if management sells out immediately, then the whole exercise is simply to use the shares as "currency" to reward management and that's a real negative IMO.

Can you quote a few examples of this happening?

It's really a bitch to go through the past records to find these, it's readily available data on sgx site:

ALLOTMENT AND ISSUE OF NEW SHARES PURSUANT TO EXERCISE OF OPTIONS UNDER THE VALUETRONICS EMPLOYEE SHARE OPTION SCHEME
The Directors of the Company wish to announce that on 18 February 2014 it received written exercise notices for an aggregate of 2,987,500 ordinary shares in the capital of the Company (“Option Shares”) arising from exercise of options granted under the Valuetronics Employee Share Option Scheme. Details of the number of Option Shares and the exercise price thereof are as follows:-
Number of Options exercised
Number of Option Shares
Exercise price per Option Share
Aggregate exercise price
1
350,000
350,000
S$0.150
S$52,500
2
850,000
850,000
S$0.160
S$136,000
3
1,787,500
1,787,500
S$0.174
S$311,025
TOTAL
2,987,500
2,987,500
S$499,525
In satisfaction of the exercise of options under the ESOS, the Company had issued 2,987,500 new shares in the capital of the Company (the “New Shares”) on 24 February 2014.
The New Shares, when allotted and issued, rank pari passu in all respects with the then existing ordinary shares in the capital of the Company (“Shares”).
Immediately upon completion of the issue of the New Shares, the number of issued and paid-up capital of the Company has increased from 365,388,750 Shares (excluding treasury shares) to 368,376,250 Shares (excluding treasury shares).

Note exercise price: $0.15,$0.16,$0.174
Announcement dated 26 Feb 2014.
I cant rem the price then, but it is certainly very substantially above the exercise price.

as recent as 19 Aug 2014
ALLOTMENT AND ISSUE OF NEW SHARES PURSUANT TO EXERCISE OF OPTIONS UNDER THE VALUETRONICS EMPLOYEE SHARE OPTION SCHEME
The Directors of the Company wish to announce that on 16 August 2014 it received written exercise notices for an aggregate of 1,637,500 ordinary shares in the capital of the Company (“Option Shares”) arising from exercise of options granted under the Valuetronics Employee Share Option Scheme. Details of the number of Option Shares and the exercise price thereof are as follows:-

Exercise price $0.174
In Aug, the share price was prob above $0.40?
In AR 2013, Hung Kai Wing was listed as no.4 top SH with 27,714,737 shares
In AR 2014, he's no.7 with 14,202,237 shares

I rem there were other disposals after exercising options, in 2012 and earlier too when I previously analysed this

[Bubbachuck]

Phillip Securities counter report.

http://singaporestockmarketnews.blogspot...s.html?m=1

[GFG]

Phillip Securities counter report.

http://singaporestockmarketnews.blogspot...s.html?m=1

thanks for the update.
The price is now making this interesting.