Sin Ghee Huat Corporation Ltd is engaged in the sale and distribution of stainless steel products, including; bars, plates, pipes, flanges, tubes, and fittings. The company’s segments include:
- Marine and ship-building;
- Oil, gas, and petrochemical;
- Building and construction;
- Machining and processing, and
- Trading and others.
The company distributes 304/304L and 316/316L grades of austenitic stainless steel, as well as duplex steel products and specialty metals.
The main warehousing facilities are located at 62 Tuas Basin Link and 32 Gul Crescent in Singapore. They also have a warehousing facility in Suzhou Industrial Park, China.
According to their most recent annual report and most recent (unaudited) quarterly results, things are not looking good for the company. The prolonged difficulties in shipping and oil & gas have taken its toll on the financial results. Although the company is doing what it can to control costs and reduce inventories, the revenue growth shows no hope on the horizon. Fears of a China asset bubble, depressed shipbuilding, and general malaise of fossil fuels are weighing heavily on the near-term outlook.
The company trades at 62% of net current asset value, with solid statistical numbers per Piotroski, Altman, and Beneish.
| 6/30/15 | 6/30/16 | 6/30/17 | |
| Cash and Short-term Investments | 16,870,000 $ | 26,003,000 $ | 30,737,000 $ |
| (0.75 * Accounts Receivable) | 12,034,500 $ | 8,493,750 $ | 7,686,000 $ |
| (0.5 * Inventory) | 22,374,500 $ | 19,388,000 $ | 18,432,500 $ |
| Total Liabilities | 5,066,000 $ | 2,644,000 $ | 3,218,000 $ |
| NNWC | 46,213,000 $ | 51,240,750 $ | 53,637,500 $ |
| NCAV | 75,036,000 $ | 73,460,000 $ | 74,632,000 $ |
| NCAV + LT Investments | 80,199,000 $ | 77,632,000 $ | 76,670,000 $ |
| TBV | 89,111,000 $ | 85,860,000 $ | 84,472,000 $ |
| Enterprise Value | 20,101,000 $ | ||
| Retained Earnings | 37,110,000 $ | 35,726,000 $ | |
| Dividend Payout | (3,330,000) $ | (3,330,000) $ | (1,110,000) $ |
| Shares Outstanding | 222,000,000 | 222,000,000 | 222,000,000 |
| P / NNWC | 125% | 87% | 87% |
| P / NCAV | 77% | 60% | 62% |
| P / NCAV + LT Investments | 72% | 57% | 61% |
| P / TBV | 65% | 52% | 55% |
| NCAV Burn Rate | 0.8% | -2.1% | 1.6% |
| Debt / Equity | 5.7% | 3.1% | 3.8% |
| F-Score | 5 | 6 | 5 |
| FS-Score | 6 | 7 | 5 |
| Z-Score | 10.6 | ||
| Beneish M-Score | (4.4) | ||
| EV / Operating Income (5yr) | 168% | ||
| EV / Operating Income (10yr) | 41% | ||
| Operating Income (10yr) | 48,550,000 $ |
| SUBSTANTIAL SHAREHOLDERS AS AT 6 SEPTEMBER 2017 | |||
| Direct Inerest | Deemed Interest | ||
| 2GS Investment Pte. Ltd. | 56,700,000 | 25.5% | |
| Kua Geok Lay Holding Pte. Ltd. | 52,635,000 | 23.7% | |
| Kua Chee Hong | 13,599,000 | 6.1% | 2,609,100 |
| Ler Bee Chin | 2,609,100 | 1.2% | 13,599,000 |
| Kua Eng Watt | 560,000 | 0.3% | 56,700,000 |
| Kua Eng Bee | 0 | 56,700,000 | |
| Kua Peng Chuan | 11,102,000 | 5.0% | |
| 61.8% | |||
Asset values have been propped up reasonably well for the past 10 years — as NCAV burn rates have been mitigated. Market values have traded at par with NCAV, but it’s been a while.
Leaven Partners 