Mencast Holdings

[Musicwhiz]

Mencast is trading at record high of 60 cents now with over 2 million shares traded. I wonder what is driving this sustained buying over the past few days ???? The main benefit is that the amount of shares to be issued for the acquisition of Top Great and Unidive will be reduced significantly if the share price remains at this level.

(Vested)

Wow Nick congrats! Your investment in Mencast has bore fruit within a short period of time.

Too bad I was spending too much time analyzing the Company. I guess Mr. Market was much more optimistic than I was!

[secretinvestors]

Hi all,

I was also wondering why mencast (usually a quiet stock) had surged so much with nice volume recently. Anyone have any ideas? Nick whats your projected intrinsic value of the stock?

(Vested)

[Nick]

Hi secretinvestor,

I bought Mencast over a year ago though much of the share price appreciation was experienced in the last few months (and last few days). I don't have an intrinsic value for Mencast. There are plenty of growth opportunities for Mencast after having made two acquisitions and with the penjuru facility becoming operational at the end of the year. I cannot quantify this growth potential. Those acquisitions could turn out to be a major flop as well ! I will wait for their 1H 2011 result due in a few weeks time to see how their core business is faring. Mencast is trading at a historic PER of 11.8, P/B of 2.5 and dividend yield of 1.9%.

Do you have a TP for Mencast ? I would value your inputs in this matter. I am extremely surprised by the run up in the trading price. It could very well dissipate in the next few days.

(Vested)

[secretinvestors]

Hi secretinvestor,

I bought Mencast over a year ago though much of the share price appreciation was experienced in the last few months (and last few days). I don't have an intrinsic value for Mencast. There are plenty of growth opportunities for Mencast after having made two acquisitions and with the penjuru facility becoming operational at the end of the year. I cannot quantify this growth potential. Those acquisitions could turn out to be a major flop as well ! I will wait for their 1H 2011 result due in a few weeks time to see how their core business is faring. Mencast is trading at a historic PER of 11.8, P/B of 2.5 and dividend yield of 1.9%.

Do you have a TP for Mencast ? I would value your inputs in this matter. I am extremely surprised by the run up in the trading price. It could very well dissipate in the next few days.

(Vested)

I bought mencast in Feb '11 at $0.40. According to my forecasts, mencast is currently overvalued. However, I note that the intrinsic value may continue to raise due to its massive growth. The recent surge may be due to traders' emotional anxiety and it might be a good time to take advantage of this. To play safe and preserve some capital in view of the uncertainty ahead (mencast expansion and economic factors), I may consider selling a portion of my stake in mencast (probably around 40%) and see how it goes.

What do you think? Musicwhiz, it'll be great if i can hear your opinion as well! Thanks!

[Musicwhiz]

Musicwhiz, it'll be great if i can hear your opinion as well! Thanks!

Hi there,

Haha I don't think I am qualified to give much advice on Mencast. I am still learning as I go along and consider myself rather inexperienced when it comes to investing; there are many other veterans here such as dydx.

The reasons as follows:-

1) I don't know Mencast well enough as I only did a cursory analysis of the numbers and prospects based on SGXNet announcements.

2) Listing history is too short, hence do not have 10-year data for analysis.

3) I am also struggling for my own portfolio to keep pace with the Index, so it's not been an easy journey. It's thus not very proper for me to give advice on Mencast when I feel I am also lacking in analysis of my own companies! Haha!

[Nick]

Hi secretinvestor,

I bought Mencast over a year ago though much of the share price appreciation was experienced in the last few months (and last few days). I don't have an intrinsic value for Mencast. There are plenty of growth opportunities for Mencast after having made two acquisitions and with the penjuru facility becoming operational at the end of the year. I cannot quantify this growth potential. Those acquisitions could turn out to be a major flop as well ! I will wait for their 1H 2011 result due in a few weeks time to see how their core business is faring. Mencast is trading at a historic PER of 11.8, P/B of 2.5 and dividend yield of 1.9%.

Do you have a TP for Mencast ? I would value your inputs in this matter. I am extremely surprised by the run up in the trading price. It could very well dissipate in the next few days.

(Vested)

I bought mencast in Feb '11 at $0.40. According to my forecasts, mencast is currently overvalued. However, I note that the intrinsic value may continue to raise due to its massive growth. The recent surge may be due to traders' emotional anxiety and it might be a good time to take advantage of this. To play safe and preserve some capital in view of the uncertainty ahead (mencast expansion and economic factors), I may consider selling a portion of my stake in mencast (probably around 40%) and see how it goes.

What do you think? Musicwhiz, it'll be great if i can hear your opinion as well! Thanks!

There is no shame in taking profits. Congrats on your 50% gains in just a few months !

If you don't mind sharing, what is your intrinsic valuation for Mencast and how did you derive it ?

[secretinvestors]

Hi there,

Haha I don't think I am qualified to give much advice on Mencast. I am still learning as I go along and consider myself rather inexperienced when it comes to investing; there are many other veterans here such as dydx.

The reasons as follows:-

1) I don't know Mencast well enough as I only did a cursory analysis of the numbers and prospects based on SGXNet announcements.

2) Listing history is too short, hence do not have 10-year data for analysis.

3) I am also struggling for my own portfolio to keep pace with the Index, so it's not been an easy journey. It's thus not very proper for me to give advice on Mencast when I feel I am also lacking in analysis of my own companies! Haha!

Yes thank you for your reply, Musicwhiz. Please do comment and provide any opinions or feedback whenever you are ready Will really appreciate it!

---

There is no shame in taking profits. Congrats on your 50% gains in just a few months !

If you don't mind sharing, what is your intrinsic valuation for Mencast and how did you derive it ?
[/quote]

My intrinsic value is the present value of the cash that can be taken out of mencast during the company's remaining life (which i typically assume to be 10-20 years). There are quite a few assumptions to be made such as its growth rate, which i tend to project based on its historical growth (i will adjust accordingly if i feel the growth is too high and unsustainable). Also, i assumed a zero growth rate towards the later years of its life. The discount rate have to be assumed as well. To be conservative, i exclude any dividends that the company may pay in the future. With so much uncertainty, my intrinsic value is at best, an estimation. Typically, I will purchase my stock if there is at least 30% margin of safety. Thus, i value mencast to be about $0.54-$0.58. I have since sold 40% of my stake at $0.605 in view of the uncertainty in economics and its expansion plans. I decided to keep 60% as i believe its intrinsic value may increase overtime (hopefully its expansion strategy is successful enough). Again, the price of the stock is the market price but the value of it depends on the eyes of the beholder and thus is very subjective. Hope it helps!

[Nick]

Hi secretinvestor,

Thank you for sharing your calculations with us. I did not use DCF method of valuation for Mencast since the earnings and cash-flow can be very volatile. I would agree with you that there isn't much margin of safety at current prices. Whoever buys now, buys for growth solely. It isn't over-valued either. I will keep an eye on how the acquisitions will perform in 2H 2011 results. I hope you will continue to share your views and thoughts in this forum.

Cheers !

Some corporate updates:

http://info.sgx.com/webcoranncatth.nsf/V...5002B2D81/$file/TG_Completion_Announcement_20110722.PDF?openelement - The acquisition of Top Great was completed in 22 July 2011.

http://info.sgx.com/webcoranncatth.nsf/V...A0035ADAA/$file/ProjectDareDevil_Completion_Announcement.pdf?openelement - The acquisition of Unidive was completed in 28 July 2011. There has been a change in issue price formula for the New Shares to take into account the rise in the share price recently.

Both acquisitions will have an impact in Mencast 2H 2011 results.

(Vested)

[secretinvestors]

Hi secretinvestor,

Thank you for sharing your calculations with us. I did not use DCF method of valuation for Mencast since the earnings and cash-flow can be very volatile. I would agree with you that there isn't much margin of safety at current prices. Whoever buys now, buys for growth solely. It isn't over-valued either. I will keep an eye on how the acquisitions will perform in 2H 2011 results. I hope you will continue to share your views and thoughts in this forum.

Cheers !

Some corporate updates:

http://info.sgx.com/webcoranncatth.nsf/V...5002B2D81/$file/TG_Completion_Announcement_20110722.PDF?openelement - The acquisition of Top Great was completed in 22 July 2011.

http://info.sgx.com/webcoranncatth.nsf/V...5002B2D81/$file/TG_Completion_Announcement_20110722.PDF?openelement - The acquisition of Unidive was completed in 28 July 2011. There has been a change in issue price formula for the New Shares to take into account the rise in the share price recently.

Both acquisitions will have an impact in Mencast 2H 2011 results.

(Vested)

Hi Nick,

I understand that these acquisitions will impact 2H11 results but whats your opinion on the change in issue price to reflect current market price (how will it impact mencast, investors etc)? Also, what valuation model did you use and what is the estimated fair value that you've derived?

(Vested)

[Nick]

Hi secretinvestor,

Thank you for sharing your calculations with us. I did not use DCF method of valuation for Mencast since the earnings and cash-flow can be very volatile. I would agree with you that there isn't much margin of safety at current prices. Whoever buys now, buys for growth solely. It isn't over-valued either. I will keep an eye on how the acquisitions will perform in 2H 2011 results. I hope you will continue to share your views and thoughts in this forum.

Cheers !

Some corporate updates:

http://info.sgx.com/webcoranncatth.nsf/V...5002B2D81/$file/TG_Completion_Announcement_20110722.PDF?openelement - The acquisition of Top Great was completed in 22 July 2011.

http://info.sgx.com/webcoranncatth.nsf/V...5002B2D81/$file/TG_Completion_Announcement_20110722.PDF?openelement - The acquisition of Unidive was completed in 28 July 2011. There has been a change in issue price formula for the New Shares to take into account the rise in the share price recently.

Both acquisitions will have an impact in Mencast 2H 2011 results.

(Vested)

Hi Nick,

I understand that these acquisitions will impact 2H11 results but whats your opinion on the change in issue price to reflect current market price (how will it impact mencast, investors etc)? Also, what valuation model did you use and what is the estimated fair value that you've derived?

(Vested)

The Unidive deal will be satisfied by a cash offer of $12.425 mil and new shares valued at $2.425 mil. The higher the issue price of the New Shares, the lesser the number of shares to be issued and hence the lesser the dilution impact on existing shareholders. This will imply a higher EPS.

Example:

Issue Price: $0.41
No of shares to be issued: 5.91 mil shares

Issue Price: $0.50
No of shares to be issued: 4.85 mil shares

Issue Price: $0.54
No of shares to be issued: 4.49 mil shares

Mencast will reveal the issue price and no of shares allocated to the Unidive and Top Great vendors in the near future.

I don't use financial models to derive an estimated TP for my investments in companies. I tend to look at the operating history, Management's track record, the business prospects etc to judge a company's worth. I am still new in investing and this forum is a great place to learn new things and pick up good habits from the pros here.

(Vested)