Auric Pacific Group

[dydx]

I have just taken a quick look at the FY10 (ended 31Dec10) results announcement first released on 25Feb11 (last Friday).....
http://info.sgx.com/webcoranncatth.nsf/V...2003AC46E/$file/APGLFullYear2010.pdf?openelement [FY10 results announcement]

Based on the 125.67m outstanding isssued shares (as at 31Dec10), and the last done share price of $0.685, Auric's market cap. is now only $86.1m! When compared against the 31Dec10 per share NAV of $1.77 and equity position of $221.96m, this appears a grossly under-priced situation by Mr Market. Any views from fellow forumers?

Auric has declared a higher $0.03/share Final dividend for FY10 (vs. $0.02/share in FY09).

[valuestalker]

a quick glance, the intangible asset of 103M is about 40% of total equity of 244M.
Wondering what are those?

[VestedInterest]

This type pf company would be a good candidate to be taken private- share price a fraction of NAV, illiquid, big shareholder in the Lippo group. etc. Just wondering why they cannot make a profit (loss reported in the last quarter). Buying Delifrance was a big mistake- yet to turn it around. Hopefully with the rebranding, they may be in the black in the next few quarters but looking at the empty restaurants, thinks don't look too promising. Sunshine bread though is doing quite well. Some good moves and mis-steps in the past: sold off China energy in the nick of time, made good money on Robinsons but sold 1 Philip St too early and bought FJH at a high price. Now they're going into property. Looks like their cash hoard is dwindling and the NAV falling. Am still hoping...

[yeokiwi]

The two bread business companies in Singapore are not very good in investment.
Auric with Delifrance and FJH and QAF with China Food Industries.

I used to be very interested in Auric due to its cash hoard but Auric did not seem to be able to acquire good businesses. The money that went down the drain is a loss to the shareholders of Auric.

Although as a company with lots of cash(>40cts?),3-4% dividend and good asset(bread business), 65cts is an ok price.

[d.o.g.]

a quick glance, the intangible asset of 103M is about 40% of total equity of 244M.
Wondering what are those?

The 2010 annual report gives a breakdown (Note 11):

Goodwill $30m

This is clearly of zero value.

Trademarks $21m

These refer to the trademarks "Food Junction" and "Malone's". The limited profitability of these operations would suggest a fair value of zero.

Trademark licence $32m

This refers to Delifrance. Again, the limited profitability suggests a fair value of zero.

Unpatented technology $10m

This refers to a food preparation technique used in Delifrance. Again, given the limited profitability of Delifrance, a fair value of zero should be assigned.

Customer relationships $11m

These refer to tenancy agreements with food court stallholders. These agreements have value only to the extent that the stallholders are paying above-market rents. Since we do not know the ability of the stallholders to pay these above-market rents, it would be wise to be conservative and write this down to zero.

===

After these adjustments, shareholders' equity falls from $245m to $144m. Since there are 126m shares outstanding, the adjusted NAV per share is $1.14. The last traded price was $0.65, a 43% discount.

Is the discount justified? Considering the erratic profitability and the decline in reported shareholders' equity from $296m to $245m over the last 5 years, it would appear that the onus is on the management to prove that they can create value for shareholders. At the moment, investor skepticism appears to be well-founded.

Dividends paid out in the last 5 years have ranged from a high of 7 cents per share to a low of 2 cents per share. Assuming that 2 cents per share is sustainable, the investor can expect a minimum yield of 3% at the current price. However, should profitability worsen, NAV may decline further, or the discount to NAV may widen, in which case the investor would be facing capital loss.

[pianist]

dont the external auditor test for impairment to these goodwills annually?

[Musicwhiz]

dont the external auditor test for impairment to these goodwills annually?

This test is subjective. As long as Management gives its case of not impairing because of XXX reasons, the auditors will usually acquiese and agree to hold goodwill at book value, instead of subjecting it to a brutal write-down which would wipe out a substantial chunk of profits (write-offs are taken immediately to Income Statement as an expense).

As an investor though, and as d.o.g. pointed out, to be conservative we have to assign fair values of ZERO if we feel the underlying business may not contribute to earnings and to the value of the Group's business. Even if, in reality, the value of the goodwill is not zero, it would be more prudent to assume it as such in order to give a more conservative valuation to the business.

[VestedInterest]

http://www.sgx.com/wps/portal/sgxweb/hom...ouncements

Any thoughts about the latest quarterly report? Has it turned the corner even despite a one off profit from Keisha? There is no mention about Delifrance.

[VestedInterest]

Anyone knows why the sudden price surge today? Is it merely playing catch up?

[piggo]

The well connected Saw might be joining soon?

http://forums.asiaone.com/showthread.php...&page=6#57