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Allan international -
I was keeping a close tab on this one.
Why was the drop so sharp...15% in one day was massive man. The only reason was like what you said a drop in earnings, however it was growing at >10% clip per annually. With fair bit of net cash and sustainable ROEs...not too sure what else can be wrong.
Hey Will, wanted to ask. Whats so special with their business that they earn such good margins and growth. Seems like its all OEM or some lousy brand home appliances aint it??
what is it that I dont know?
Dongxiang -
Yeah there was a shuffle to bring on board mgmt whom have dealt with foreign brands and also the reason why they did a Kappa tie up.
Not sure why its such a smashing hit with China people.
i dont know why theres a discrepancy.
Mine all shows 361.48mm out shs
Re JP Taxes
Yes, rjeezy007 is right.
Thats the reason why Japan stocks have gone nowhere in the past years.
Not only owners holding the shares are implicated for tax reasons, there are also numerous cross holdings and unlisted entities which have to be considered individually. So while its 10% for retail guys, the action to unlock value is actually dependent on the majority guys 30-40% as well as all the cross holders. The more cross holdings, the more overlapping taxes to pay for, is just like to franked dividends in Asia that was recently phased out.
HIG : Hartford Financial
http://files.shareholder.com/downloads/HIG/1296087498x0x445314/27078528-1FC3-4C88-9EB8-086C2770DA73/HIG_2010_Form_10-K_Final.pdf
Note pg
31 - Overall financials
79 - Annuity
My thoughts
- P&C is well managed
- Life ins is pretty shitty and wth are they in Japan annuity?
- Annuities is $150m (i.e over 50% of their Wealth mgmt AUM) Big risk as demonstrated in swing of $10 million add back profits in 2008.
- annuities are often equity linked, i.e clients buys basket of stocks for retirement and if value falls, Hartford guarantees a minimum return. So gains or losses on its portfolio is not an entire risk and may be small versus potential losses on its guarantees. Ex. they can hold $150million AUM but guarantee >$150 million of positions and losses can be > AUM even if positions do not decline to 0.
- you are right to say they are like AIG, albeit different in form. The essense is the same. They are receiving small regular income cash inflows from clients bu will face massive outflows if sh*t hits the fan.
- The team is sucky in investments, period.
ppt
http://files.shareholder.com/downloads/HIG/1296087498x0x464179/129525c6-e0cc-4620-8d0b-11d7a23bab9a/1Q11%20Final.pdf
news
http://www.marketwatch.com/story/hartford-financial-loses-half-its-market-value-on-capital-concern
http://www.financial-planning.com/news/hartford-ending-foreign-annuities-sales-2661832-1.html
http://online.wsj.com/article/SB10001424052702303848104576383502086481330.html?mod=googlenews_wsj
6930 Nippon Antenna
- They hoard cash due to draconian tax reasons
- they wont give it out anytime soon
- many investors have since got stuck including famous value investors, one good example is TCI
I cant PM you. can u pm me your email instead? Thanks!
I guess i know how you program. Last i did was a query but alot of junk data. haha
BIG - Big Lots
I am looking in this firm.
They do closeouts and overstock products. However, I am not in the US and do not know how are they operating there. Appreciate some comments.
Why I think its interesting.
- Financially stable, net cash
- Strong cash flows and acquires opportunistically
- Has an edge in closeouts and overstock (size matters)
- This firm is in a unique field, resilient in recessions
- Doesn't seem to have any other listed competitors
- Management is aligned to the firm and creates shareholder value
- If vs other buyout targets, its undervalued
My concerns:
- Being closeouts, goods are inconsistent and on as when basis
- Management gave a muted growth outlook (Does it really matter?)
- Distribution is impt, had some loss years when it was messed up
- Still declining after a failed LBO by PE firms
- Thin margins, though not as thin as Costco or Walmart
Comps
- I am also looking at Gordman's (Just IPOed), Dollar Tree and Family Dollar stores. Let me know if you have any insights to these counters.
0184 Keck Seng
- As mentioned, cap rates for US went from 10 to 6% but one must understand caps cannot be applied universally due to risk of the property, the area, interest rates, fx etc
- HK is land constrained, studies put it like 2x more constrained than NYC and although HKD is pegged to USD, its govt fiscal approach is different and many buyers do in fact pay entirely by cash. That gives rise to differences in cap rates even if they should not be used to value properties in entirety.
- Commercial properties have always been at a very tight cap and has never tanked severely since 1900s because of their profile and nature. Thats the reason why everyone puts up seemingly low caps as if it is a given. Further, many mid commercial areas are further redeveloped into residential putting further pressure on supply. Cannot say the same for residential which tanked a couple of times, namely 1997.
- This firm is very conservative. When you actually go to Asia and look at their buildings, you will get my drift. The Tokyo properties I have seen and they are pretty good purchases and the reason why they give out a 5% yield - cos they focus on income than appreciation.
- KS actually has a more interesting Malaysia listed counterpart. Do take a look. I think that ones more undervalued. But that one is harder to value since the financials do not reflect the firm accurately. I am vested in that one.
- It is only right that operating properties are classified as PPE with depreciation and investment properties as inventory type of assets with no depreciation. To put it strictly, the land below the hotel does not effectively depreciate.
Oh btw, if any of you write any investor letters, I would appreciate if I can subscribe to it too.
Property Firms (HK)
In response to Thrower:
Revaluations are under IFRS and its not really a fudgy rule since only property under fixed assets are depreciated. Land that is valuable do appreciate over time rather than depreciate. The rule is logical but not without loopholes, just like the mark to marktet requirements changed post Enron.
Re Keck Seng, I have met the guys there before. Good people, sharp and know real estate really well. Many of the property investment firms are in commercial where cap rates are very very tight, in fact one of the tightest in the world so its not facing the same headwinds as residential.
Would be glad if you want to share your analysis on KS HK.
AIT -CSCO
IT means AIT is qualified to sell and use Cisco products in their services and it may well happen that they sell the most Cisco products in Thailand and hence the Gold partner status.
AIT look good financially, havent gone really in depth.
To put it in layman terms (which I have learnt from) is that AIT does projects that lays up the infrastructure for IT systems within an organisation or operation and uses Cisco products (Likely to be routers and switches) to link up LAN networks.
Being a Cisco customer also means tight margins but this firm has performed well. So thats a big positive.
BUt I cant buy into Thai markets ...you use Interactive brokers?
Asia Ideas? 0237/2698 hk
I was looking around.
This firm Safety Godown (0237 hk) looks interesting with Investment properties at least 40-60% over the market cap. But I dont like that it is a passive firm and hard for me to unlock value since im not a control activist like Bruce Berkowitz.
Also several funds have bought into Weiqiao textile (2698 hk)including Brandes and BONY. Its the worlds largest cotton fabric manufacturer. But I dont like the heavy capex and lack of free cash.
Let me know your thoughts for this 2, appreciate if you guys have more ideas.
Cheers!
RIMM
I guess its a case of market trying to fortell the future.
In terms of smartphones we have seen plenty new ones coming out and it wont be long before a company offers something similar. The niche of RIMM is not really there. For example, now Standard Chartered Bank issues Iphones instead of Blackberries, in Singapore at least.
As a boss, i think i will issue Blackberry to increase productivity but in the long run theres 3 possibilities and chance of happening:
1) A similar working smartphone (20%)
2) A replacement technology - (30%)
3) People switching to a multi functional phone (50%)
Why the chance number is so?
1) If its going to be similar, then why bother spending capex, making something similar and probably cutting margins to gain share?
2) This is a crystal ball. Perhaps there will be a phone that taps into cloud computing and strong enough to ignore network and operate as a standalone entity.
3) This will be the way as there is increasing connectivity and people like to multi task even though they suck at it. Thats why smartphones exist today. Coupled with ability to perhaps integrate with your life, example house system or work office system, things can really change and Rimm by then will offer very little.
So in view of option 3), RIMM is really not cheap enough at now Mkt cap : $20 billion
Cash : $2 billion
Cash fl : $2.5 billion
SBB : $2 billion in 2010
So the main assumption here is $20-$2 cash =$18bn / $2.5b CF = 7+ years of continued operations without growth slowing. To me thats not convincing enough.
**My note is abit sweeping with no in depth figures but this are my thoughts
0550 HK
Godfathers company means the firm is owned by a legacy tycoon in Asia. They tend to arm twist their way to get things done.
Yes, another spin off scheduled.
I would give it >50% chance since this time they r spinning out the bad stuff, unlike the previous attempt where they tried to spin out the good division haha, that was a a real joke.
And you right on the ads vs print segments. Right again on entire entity being undervalued. To note, the printing business is still making good ROEs and profit growths so I think that alone is not valued well.
Secondly the ads profit growth is phenomenal, I did a in depth look..the segment ROI is like 80% ads vs 17% printing. Both not bad.
Some family investment companies have been loading up too .
My only concern is note that ads are purely from Chinese airlines and is on a 5 year + possible 5 year extended contract. What this means is that this division could totally disappear in 5 years time or they can possible continue for another 5 years.
Hence, i think an appropriate value is 5x Ads ($100 million profit p.a)+ $350-400 (print business @ 1x PBR) = $850-900 million which means its fairly valued.
So I am trying to understand more about the ads side of things to be convicted to purchase the securities. Do let me know if you have other information on it.
CSCO
My first reccomendation since being pulled to this forum by Thrower.
Appreciate all the fast thinking in this forum and honest comments.
was looking at Cisco, suffering a poor image, loss of mkt share and share price performance is negative since dotcom times. Many like Juniper and Huawei have done leaps and bounds.
Mkt cap = 92bn
Net cash & ST invt = 26+bn
PE / PB = 13.2x / 2.10x, ex net cash is likely 9+x 2011 PE
Sales / profits (FY) = 40.0bn / 7.7 bn
Sales / profits (LTM)= 42.7bn / 7.1 bn
Mkt products
1) routers 40% sales - edge routers (to link various local networks)losing mkt share fast now holding 43% from 50+% (Main competitor = Alcatel Lucent) and core routers (to link up within a network) stable but also losing at 55% from 57% (Main competitor = Avic).
2) switches 20% sales - still having 70+% market share, slowly very slowly declining but I think competitors are bleeding to gain market share here. This is where Cisco is very very strong.
3) Advanced technologies 30+% sales - still growing at a good clip >10%p.a. Comprises of infrastructure and cloud networking + other new ventures like IP telephone, security and wireless, storage and optical networking.
4) Other services 10% - technical support and optimization. Likely to decline if other major segments decline.
Whats interesting abt the firm
1) FCF of (FY) $8-9bn, (LTM)9.1bn p.a. Net cash mkt cap =$66bn, thats about 7x FCF
2) Alcatel Lucent is not making money so does Nortel, Ciena
3) No other competitors can single handely bring down Cisco in any of its divisions
4) 2 great value investors are in it, one of which is long studied by myself
5) My only worry for the firm is diworsification - going into consumer goods/segment
6) even if the firm loses 5% market share per year, 7 years is more than able for FCF to cover the firm value.
7) potential ties up can take out competitors easily. IBM is excluded since its public enemy of Cisco. Dell, HP, Polycom and IBM worked with Juniper so we can see they are desperate to take out Cisco.
8) 2 current Cisco weakness are application acceleration and next-generation 10Gigabit ethernet LAN switching which are still done by very small guys. App accl guys are Riverbed, F5 Networks and Zeus Systems and Nextgen 10Gbit guys are Force10 Networks and Arista Networks.
I am looking to buy into the firm, albeit at a lower price from now since theres price weakness.
http://www.trefis.com/articles/34243/which-router-segments-are-most-important-to-cisco-stock/2011-01-07[/tag][url]" rel="nofollow" target="_blank" >http://www.trefis.com/articles/14958/huawei-can-put-pressure-on-ciscos-router-market-share-and-margins/2010-04-12[url]
[/url][tag]http://gigaom.com/2010/02/23/cisco-core-markets-competition/[/tag][url][/url][tag]http://www.wikinvest.com/stock/Cisco_Systems_(CSCO)[/tag]
NNA
- definitely if value rises sharply, depreciation will be outpaced since most firms use a straight line approach
-In seaspan case, looking it from both cost and contract is still relevant. Many of the norweigian shippers defaulted on their long term contracts.
In shipping there are many other factors such as ship build, quality of build as well as use. For example, a 30 year old drill ship of a certain hardcore class may have market value far outstripping cost ex depreciation simply because there are few who are able to produce it, cost of making it is high and it can be modded to other types of ships for flexibility.
- shipping especially container is cyclical and should not be bought when asset values are recovering
ANS
Interested to look at this but have no current access to PSE.
Wish to know how you guys are buying it from which platform?
Sorry for asking but need to know.
KT9:Qingmei SGX
Safer to wait out a few years, one year dividend means little in Asia. Especially so if auditor is Grand thorton and locality is Fujian, the hotspot of fraud hah.
Thats nice.
Theres a dearth of them in Asia.
I am from Singapore by the way. If you wish to get in touch, drop me a PM. I am not a paid user so I cant PM haha.
Im looking at this in depth.
Let me know your thoughts.
One thing is theres a low chance of success with corporate actions in HK unless its a godfather company.
the decline was due to overall industry slumping ..
reportedly theres less consumption over the years
Dongxiang was one of those having a larger market share loss versus the rest.
I was looking at this co and stayed away because of the factors you brought up on the management. Seems inconsistent with their performance. And yes, Kappa is indeed crazy in China for some unknown reasons.
The value is only as good as the management's estimates and their integrity.
Most leveraged firms try to avoid understating to avoid breaching the loan covenants.
It is true but not wholly accurate to say newer ships = better estimate of values. Most times, it is based on cost or discounted earnings and since the latter is more subjective, cost is used. And cost is really at what level you buy at in certain cycles. So if you built your entire fleet at the 2007 top, your NAV will be overvalued by 2x now.
He keeps a really close tab on the HK/ CHina guys whom are listed in HK. He has also gone against the big guys often to piss them off.
Hi there. This is an interesting post indeed.
How do you buy the bonds? Which platform do you use and are you an institutional investor?
I think theres a few things to look at.
Firstly, it is right that >= $1 is the share price needed to effect conversion and the noteholder needs to pay an additional $2 to get equity.
so amount of cash on conversion will be $61.4mm / $2 = 30.7 shares
However, share price needs to be above $1, if like now its <$1, then cash is reserved to paying coupons to noteholders of 10.75% and rest $1.37 / sh to shareholders.
If share price is above $1, then shareholders pay $2 extra to convert, so breakeven has to be $3 per share. including the expected special payout of $1.37, then breakeven stock price will be $1.63.
So it seems noteholders will just hang on and not convert while current shareholders will get $1.37 /sh.
BUT,
- noteholders usually have a say in the cash distributions and in this case, according to link below, point vi, solikely equity holders will get nothing.
[url][/url][tag]http://www.prnewswire.com/news-releases/bmb-munai-inc-announces-note-restructure-117610943.html[/tag]
- theres a put option on the notes 1 year before maturity, I.e 2012, so there must be reserve cash of $61.4mm at 2012 to redeem those guys.
Think you may have missed out some information, but generally, the noteholders have some strong arm twisting power.