B7K:SG - Sin Ghee Huat

[mjohn707]

Sin Ghee Huat is a Singapore listed company that is engaged in the stainless steel distribution business.  Although the company has a history of profitability, they have suffered operating losses in the last two fiscal years, as well as an additional quarterly loss in 1Q18 due to declines in their end markets.

 

Despite these issues, I believe the company is a reasonable investment at current prices using a basket approach due to the large discount from NCAV, significant cash balances, and lack of debt.  Shares trade for about 55% of book value, 62% of NCAV, and 74% of Graham-style liquidating value, and the company has cash balances of 31.6M SGD against total liabilities of only 2.4M SGD, and a market capitalization of 47M SGD.  In addition the company’s operating losses have not been significant in relation to their book value.

 

The Kua family controls the company with a 50+% position in the common stock.  Management salaries seem reasonable and the company has a policy of paying out 50% of net income as dividends.  I’m attaching a copy of a spreadsheet with a 10-year summary of the company’s income and balance sheets, and a calculation of NCAV and liquidating value.

 

Current Price:  0.210 SGD

Market Cap:  47M SGD

P/E:  N/A

P/B:  55%

P/NCAV:  62%

Sin_Ghee_Huat.xlsx