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Consolidation Update - Why This Stock Is Undervalued, and Not Many People Know About It
Consolidation Update - Why This Stock Is Undervalued, and Not Many People Know About It
BigFatPurse Pte Ltd (the Company) is not licensed to provide investment advisory.
The Information provided in this report is for the purpose of illustrating an investment
valuation technique used by the Company. The Information is not intended to be and
does not constitute financial advice. It is general in nature and not specific to you.
The information is written based on the opinion of the writer. Financial figures and data
were obtained from the official financial report available to the public.
The writer does NOT guarantee any returns from the purchase of the discussed stock.
Readers should seek the advice of a qualified and registered securities professional or
do their own research and due diligence. You are responsible for your own investment
research and investment decisions.
In no event will the Company be liable for any damages. Under no circumstances will
the Company be liable for any loss or damage caused by a readers reliance on the
Information in this report.
The writer owns the discussed stock at the point of writing.
Updates
Due to the recent stock consolidation that has took place in SGX, there have been
changes to the stock price of the discussed stock. Changes have been indicated in red
in the following report.
All other values, figures and calculation remains unchanged.
Summary
40%
Cash
Properties
Investments
Inventories
Receivables
The CNAV for Powermatic Data (PM Data) is $0.22 ($1.12 after
consolidation) while the stock is trading around $0.19 ($0.90 during time of
update). This presented a CNAV discount of 14%. You can refer to
Appendix A for the calculation of the value and discount.
Debt-Free
Cash:
$18.7M
Total
Liabilities
: $3.6M
Looking at the balance sheet, the company has S$18.7m worth of cash
while the total liabilities are S$3.6m. The company is essentially debt free
as they have the ability to pay back all the liabilities without the need to
drain out the cash.
There have been speculations about interest rate hike in the near future.
Assuming this is true, PM Data would not be hurt by high interest rates with
such low liabilities.
Management's Interests
Dr Chen Mun, the CEO, owns 56 percent stake based on Pg 90 of the
2014 Annual Report:
His interest would be more aligned with shareholders than many other
companies where the management's reward is mainly from salary and has
little or no stake in the well-being of the company.
Besides the sizeable stake, Dr Chen Mun is the founder of the company.
There is an intangible sentimental value in the company for him. Hence, it
is unlikely he would do harm to PM Data.
This is not a case for PM Data as the company has been giving out $0.01
per share dividend for consecutive past 8 years. Based on a price of $0.19,
the dividend yield is about 5 percent, which is very comparable, or even
higher, than some of the blue chip companies.
(Update) The dividend yield will not be changed as we are using values
before the consolidation to determine it.
Corporate Actions
PM Data had commenced the share buy-back program since Feb 2015 and
had purchased 776,000 shares as at 8 Apr 2015, worth approximately
$140,000. This is a good sign as the company is buying the shares at
undervalued prices, creating extra value for existing shareholders.
Recently, the company proposed a 1 for 5 share consolidation in response
to the newly implemented SGXs Minimum Trading Price (MTP) of $0.20.
This exercise is not going to change the value of the company.
Investment Property
S$18,608,000
Inventories S$772,500
We will always begin with the Balance Sheet, or also known as Statements
of Financial Position. You can find this on Pg 34 of the 2014 Annual Report.
Other Assets = S$0 (these are deposits made to secure services. Deposits
may not be refunded in the event that the contract was terminated.)
Cash and Cash Equivalent = S$18,749,000
Summing up the Conservative Value of the Assets = S$42,352,000
PM Data only have current liabilities, which means essentially the total
liabilities are equivalent to the current liabilities of S$3,646,000.
It is also important to note that there are no Non-controlling Interests and
no preference shares in the company and hence, the Net Asset Value need
not be adjusted to exclude these figures.
In year 2014 it was positive operating cash flow but negative in 2013.
We need to refer to the 2012 Annual Report for the 2012 operating cash
flow.
PM Datas 2012 cash flow is also positive and we give one point if at least
two of the past three years operating cash flow were positive.
- End of Analysis -