BKA:SG – Sin Heng Heavy Machinery

[mjohn707]

Sing Heng Heavy Machinery is a Singapore listed company that sells, rents and services heavy equipment.  The company has had several tough years due to what I think is a cyclical fluctuation in their mining and construction end markets.  Although the company’s equipment rental segment has demonstrated stability, equipment sales have declined quite a bit from previous years.

 

Despite the recent issues, Sing Heng has historically demonstrated an earnings power of about 10M SG per year against a current market cap of 54M SG, and currently trades for about 45% of tangible book value.  Cash balances just about approximate their debt as of the most recent balance sheet.  I believe Sing Heng is worth approximately book value assuming that earnings eventually mean revert, with reasonable downside protection due to the large discount from book value at current prices, and low net debt.

 

Tan Ah Lye, who owns about 28% of the common stock, controls the company.  Management salaries seems a little on the high side for Singapore based off of my limited knowledge of Singapore small cap salary scales, but not overly excessive.  The company pays a small dividend and has recently repurchased a small number of shares as well. 

 

I’m attaching a copy of a spreadsheet with a 9-year summary of the company’s income and balance sheets.  Shares are not super liquid so it might take a while to build a position.

 

Current Price:  0.47 SG

Market Cap:  54M SG

P/E:  33

P/B:  .45

Sin_Heng_Heavy_Machinery.xlsx