NextInsight - Latest News (Main) https://mail.nextinsight.net/ Fri, 05 Jun 2020 21:52:51 GMT FeedCreator 1.8.0-dev (info@mypapit.net) DON AGRO: Ups grain storage capacity by 50% for better profit margins http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13568-don-agro-expanding-grain-storage-capacity-by-50-for-improved-profit-margins Don Agro International, the first Russian company to list on the SGX, announced that it is investing in expanding its storage capacity by about 50%.

One of the largest agricultural companies in the Rostov region of Russia, Don Agro plans to invest S$1.9 million to expand its overall storage capacity facilities from 65,000 tonnes to 95,000 tonnes.

This initiative will allow the Group to store larger amounts of wheat and sunflower seeds for longer periods with the intent to sell more during peak pricing periods.

That will result in potentially greater profit margins.

Stock price 

32 c

52-week range

22 – 38 c

Market cap

S$48 m

PE (ttm)

7.6x

Dividend yield 

2.1%

1-year return

33%

Shares outstanding

150 m

Source: Yahoo, Company

Construction of this additional capacity has begun and is expect to complete within four months.

The additional storage capacity will enable Don Agro to harvest sunflowers more quickly and sow winter wheat within the most optimal time frame.

In addition, the Group has invested S$0.4 million to purchase the latest John Deere R4023 Self-Propelled Sprayer.

This will boost productivity and optimise efficiency, and save some costs and reduce the reliance on labour, said Don Agro.

The Group will be utilising internal funding to expand its storage capacity and acquire the new machine.

Don Agro ManagementL-R: Artur Nazaryan, CFO | Evgeny Tugolukov, Executive Chairman | Marat Devlet-Kildeyev, CEO. (Mr Tugolukov will own 78.2% of Don Agro immediately post-listing). Photo by Wei Bin

Executive Chairman Evgeny Tugolukov said, “Fresh off our IPO in February 2020, we have begun to execute various strategies for growth to strengthen our position as one of the largest agricultural companies in the Rostov region of Russia. This capital expenditure on new machinery and the expansion of our facilities will allow us to improve yields within our crop business and enhance our operational efficiency. Ultimately, these efforts will translate to improved financial performance and thereby enhance long-term shareholder value.”


Looking ahead, the Group plans to scale its business through the expansion of its arable land bank.

It is also exploring opportunities in mergers and acquisitions, joint ventures and strategic alliances with both domestic and foreign companies.

By leveraging on its expertise and experience, the Group intends to seek new and suitable opportunities to expand into other high growth regional markets within Russia, such as other districts within the Rostov region and the Krasnodar region in Russia.

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ct.leong@nextinsight.net (The NextInsight Team) Thu, 04 Jun 2020 13:50:26 GMT http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13568-don-agro-expanding-grain-storage-capacity-by-50-for-improved-profit-margins
AVI-TECH: CIMB initiates coverage with 42.2-cent target http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13564-avi-tech-cimb-initiates-coverge-with-42-2-cent-target Avi-Tech, a play on the strengthening semicon industry, has garnered initiation coverage by CGS-CIMB. The target price, however, is lower than that of UOBKH: 


Excerpts from CGS-CIMB report

Analyst: William Tng, CFA

■ We initiate coverage on AVI-TECH with an Add rating and TP of S$0.422 as we believe it is a proxy for the rising semiconductor content in automobiles.

Avi-Tech

Share price:
39 c

Target: 
42.2 c

■ Prospective dividend yields over FY20-22F of 6.49% are backed by strong free cash flow (limited capex) and a net cash balance sheet, in our view.

■ Accretive M&A are upside share price catalysts.


Established burn-in player
Avi-Tech Electronics Limited (Avi-Tech) was incorporated in Singapore in 1981 and listed on the Mainboard of the Singapore Exchange in 2007.

limenghong2.17CEO Lim Eng Hong. NextInsight file photoAvi-Tech is a total solutions provider for burn-in, burn-in board manufacturing and printed circuit board assembly (PCBA) and engineering services working with global original equipment manufacturers in the semiconductor, electronics and life sciences industries.

Exposure to rising semiconductor content in vehicles
Through its burn-in services and burn-in board manufacturing businesses, Avi-Tech offers investors exposure to the secular trend of growing semiconductor content in vehicles.

Strong dividend paymaster, in our view
Avi-Tech has minimal capex needs and hence, strong free cash flow generation.

The company has been paying dividends to shareholders for the past five years. Average dividend payout ratio over FY17-19 was a high 81% of net profit.

With a net cash balance sheet and an official 30% minimum payout policy, we expect Avi-Tech to continue rewarding shareholders with dividends.

Based on our estimates, dividend yields over FY20-22F are projected to be 6.49%.


Key risks
Key risks include

a) a deterioration in customer demand due to the escalation of the Covid-19 outbreak;
b) foreign exchange exposure risk (Avi-Tech has a net long US$ exposure); and
c) M&A turning sour (M&A is one of Avi-Tech’s strategy to utilise its cash balance to grow the company; the company’s previous M&A did not fare well).


Initiate with Add
We initiate coverage of Avi-Tech with an Add recommendation and a target price of S$0.422.

Our target price is based on 1.42x P/BV multiple, derived from the Gordon Growth Model (COE: 8.8%; ROE: 11.7%).

High net cash

williamtng4.14"We project dividend yields over FY20-22F of 6.49%. Note that Avi-Tech’s projected end-FY20F net cash accounted for 52% of its market cap."

-- William Tng, CFA (photo),
CGS-CIMB analyst

Downside risks are deterioration in customer demand due to the escalation of the Covid-19 outbreak.

Re-rating catalysts are accretive M&A, better-than-expected customer demand.


Full report here

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ct.leong@nextinsight.net (Leong Chan Teik) Wed, 03 Jun 2020 06:20:10 GMT http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13564-avi-tech-cimb-initiates-coverge-with-42-2-cent-target
Here's a 10% Dividend Small Cap Stock & Potential Multibagger http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13562-here-s-a-10-dividend-small-cap-stock-potential-multibagger I’ve bought stocks of quite a number of companies lately and thought that this small cap HK-listed stock is worth sharing: Zengame Technology (HK:2660).

Its market cap is around HKD$824.80m.

I’ve did much more digging to analyse this company but will not bore you with the details, just on the highlights.

My holding period is at least 3 years. I’m not expecting the stock to fly in a few days or weeks’ time.

Do note that the transaction volume is low, similar to a GEM (my opinion) that’s unknown to many.


Business / Story:

Due to technological advancement of mobile devices, mobile gaming has gone mainstream. Mobile Esports is on the rise.

Back in 2015, I bought Tencent at HKD$133.30. Tencent has gone on to become the world’s largest video gaming company, rewarding me with more than 300% returns.

Of course, gaming revenue isn’t the only reason that Tencent stock price shot up so much. This is one of the companies that I did not sell prior to the COVID-19 market crash.



Zengame is the 5th largest China company in the card & board mobile games sector by revenue in 2017.

In terms of average MAU (monthly active users), their flagship game Tiantian Fight ranked 3rd amongst all Fight the Landlord games domestically.

The company has won awards by Tencent such as “Most Competitive Advertisement Agent in 2019” and “Outstanding Media of the Gaming Industry”.

At the end of 2019, Zengame had over 700 million cumulative registered users.

In addition, they have strengthened the cooperation on advertising monetization with Tencent and ByteDance (owner of Tik Tok). As of Dec 2019, the company has 61 games publications in total.



Management / Founder:

The company was co-founded by the co-founder of Tencent, Jason Zeng.

The management led by Ye Sheng (CEO) & Yang Min (CTO) were directors of Tencent’s QQ Game products division.

They have a wealth of experience and likely to bring over their vast business networks and best practices. They are more likely to know what they are doing without having to “trial & error” or to go through the “hard knocks” before succeeding.

Financials:

High margins

» Its operating margin and net profit margin stands at a high 26.89% and 24.24%, respectively.

» What’s more? The company’s annual dividend yield is around 10% based on the current price! For more info on the company’s dividend, you can check it out here."

-- EngineerInvest.com

The company generates revenue from sales of virtual items and in-game information service.

On average, for the past 3 years, its revenue was growing at 25.3% and operating profits was increasing at 63.8%.

zengame chart6.20While many small cap companies are usually loss making or have a high gearing ratio, this isn’t the case for Zengame.

Zengame’s current ratio stands at 5.07 with a low total debt to equity of 1.1%. 

These stable financials signal the company is unlikely to go game over.


Verdict

It is rare to find small caps with stable financials, growing revenues, good operating profit margins and a high dividend. And in the hands of experienced management from former staff of an established company?

While the company lacks strong business competitive advantage, this is typical of most small caps. The value of the company is in its growing financials and management. Hence my purchase decision.



Do note that there are higher risks involved when investing in small caps. Proper diversification and a balanced asset allocation are required. My current asset allocation for small caps is 10%, buying multiple small cap companies using this “10%”.

There is no fixed formula on the best allocation as it all depends on your personal investing style and risk profile.

For example, if my dad decided to buy stocks, I would advise him to hold 70% high dividend defensive stocks. This allows for higher cash flows to cover his expenses for retirement.

For new investors, I would suggest they read up on asset allocation and diversification so as not to put all your eggs in one basket. Will probably share more on asset allocation in future articles.

Since I’m not working anymore, my daily routine is to scan through 20 to 30 companies a day. Till date, I have scanned through hundreds of companies, mostly small caps.

Hopefully to find GEMS in various markets (US, SG, HK, China, Malaysia).

I do this without subscribing to any paid newsletter / market screener / any related platforms.

Only my laptop and a good Wi-Fi connection. The ideas are original and come naturally while in the bathroom or in the middle of the night where I will quickly wake up and pen down my thoughts. All the stocks that I share in my blog, I have bought them personally, having skin in the game.


Disclaimer: Just sharing from experience as I have put my own money into the stock market over the period of 17 years. I am not a Chartered Financial Analyst (CFA) Charterholder and do not have any finance-related qualifications.


This article was first published in EngineerInvest.com and is republished with permission.

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ct.leong@nextinsight.net ("EngineerInvest.com") Wed, 03 Jun 2020 03:22:22 GMT http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13562-here-s-a-10-dividend-small-cap-stock-potential-multibagger
Singapore eDevelopment: Subsidiary's biomed technologies valued at S$1.3 b http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13560-singapore-edevelopment-subsidiary-s-biomedical-technologies-valued-at-s-1-3-billion Singapore eDevelopment (market cap: S$71 million), yesterday said its wholly-owned subsidiary, Impact Biomedical Inc., has been valued at US$933 million (S$1.32 billion) by "independent valuation experts".

Impact Biomedical has a suite of antiviral and medical technologies.

The suite is mainly co-owned by Impact Biomedical and its scientific research partner, Global Research and Discovery Group Sciences.

This suite is valued at US$1.39 billion (S$ 1.97 billion) as of 26 May 2020 by valuation experts which are "reputed for their expertise and skills in assessing the potential deal value of medical intellectual property," said SeD.

Stock price 

6.0 c

52-week range

1.9 – 6.8 cents

Market cap

S$71 m

PE (ttm)

--

Dividend yield 

--

1-year return

34%

Shares outstanding

1.18 b

Source: Yahoo!

The valuation is a leg up from the US$592 million (S$841 million) that Impact Biomedical had announced on 23 April 2020 as valued by Destum Partners.

The new valuation exercise, which was initiated by GRDG Sciences, takes into consideration numerous additional disease applications of the suite.

Singapore eDevelopment said the scope of the new valuation includes:

• 3F Mosquito and Antiviral Biofragrance;
• Equivir, an OTC medication with broad antiviral activity;
• Laetose, an advanced sugar replacement that is reduced calorie and low glycemic; and
• Linebacker, a broad-spectrum universal therapeutic.



Sale of Impact Biomedical for US$50 m
Singapore eDevelopment, on 4 May 2020, announced that Impact Biomedical had entered into an agreement for a proposed US$50 million share swap.

As the terms of the share swap transaction were finalized prior to the new valuation, the terms and consideration will not be amended now.

Singapore eDevelopment is selling Impact BioMedical to New York-listed Document Security Systems (DSS) in return for DSS shares. 

DSS has a market cap of under US$20 million currently.

The CEO and largest shareholder of Singapore eDevelopment is Chan Heng Fai, who is also the largest shareholder of DSS as well as Chairman of its Board.

About US$3.1 million will be paid via 14.5 million new DSS shares, representing about 18.93% of the enlarged share capital of DSS. 

The remaining US$46.9 million will be paid by way of an allotment and issuance of perpetual convertible bonds to Global BioMedical, a subsidiary of Singapore eDevelopment. 


Impact Biomedical and GRDG Sciences developed this Suite in a long-term research program adhering to the principles and initiatives established by the Panacea program, the Open Air Defense Initiative, Project Bioshield and the Biomedical Advanced Research and Development Authority of the U.S. Department of Health and Human Services.

GRDG Sciences’s Chief Scientific Advisor is Dr. Roscoe M. Moore, Jr., the former United States Assistant Surgeon General and former Epidemic Intelligence Service Officer at Centers for Disease Control and Prevention or CDC.

He said, “GRDG's broad set of technology clearly shows a comprehensive approach to provide solutions to global healthcare that is poised to make a real impact and improve the lives of many people around the world.”

Also advising GRDG Sciences is Lieutenant Colonel William H. Lyerly Jr., retired Career Senior Executive / Scientific Professional from the U.S. Department of Homeland Security and retired U.S. Army Medical Service Corps Officer. Lieutenant Colonel Lyerly also served as a senior official in the U.S. Department of Health and Human Services, the U.S. Agency for International Development, and the U.S. Executive Office of the President (White House).

Lieutenant Colonel Lyerly states, “GRDG has a wide range of novel, unique capabilities which are reflected in this valuation. Each aspect is important on its own and the combination of assets is simply astounding.”

Impact Biomedical accomplished this research and development in strategic partnership with GRDG Sciences led by Mr. Chan Heng Fai, Chairman.

Beneficial

ChanHengFai SeD“I am greatly encouraged with the results and the team’s contribution to this cause. We hope this will eventually prove to be beneficial to everyone and we look forward to more exciting discoveries”

--  Chan Heng Fai (photo),
CEO, Singapore eDevelopment

Daryl Thompson, Director of Scientific Initiatives and founder of GRDG Sciences said, “This valuation validates the 5-year project to prove the speed in which biomedical countermeasure research can be achieved, a major accomplishment especially in the present atmosphere of the COVID pandemic.”

GRDG Sciences is working with large global companies and organizations to license and integrate this technology into pipelines and programs for further validation, regulatory approval, and deployment to treat or prevent multiple threats to the health of people worldwide.


For details of the suite of biomed technologies, click on SeD's announcement here

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ct.leong@nextinsight.net (The NextInsight Team) Mon, 01 Jun 2020 12:48:00 GMT http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13560-singapore-edevelopment-subsidiary-s-biomedical-technologies-valued-at-s-1-3-billion
ISDN: Reiterate Add with higher TP of 28 cents http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13559-isdn-reiterate-add-with-higher-tp-of-s-0-28 Excerpts from CGS-CIMB report

Analyst: William Tng, CFA

Strong April rebound
■ 1Q20 revenue/net profit accounted for 27%/37% of our full-year forecasts,above our expectations.

ISDN

Share price: 
24 c

Target: 
28 c

■ As at end-Apr 20, ISDN has achieved 80.4% of our FY20F net profit.

■ Reiterate Add with higher TP of S$0.28.


1Q20 performance above expectations
On 27 May, ISDN provided a voluntary update on its performance. 1Q20 revenue/net profit of S$79.8m/S$3.1m were above our expectations.

1Q20 revenue (27% of our FY20F) grew 5.7% yoy despite disruptions from the Covid-19 outbreak which led to an extended lockdown period for ISDN’s China operations.

Net profit (37% of our FY20F) fell 26.2% yoy. Other than revenue and net profit, no other line items for the income statement were provided.

Strong recovery in April
By mid-Mar, ISDN had resumed its China operations.

In 4M20, ISDN’s revenue grew12.1% yoy to S$112.2 while net profit grew 31.4% yoy to S$6.7m. For the month of Apr, ISDN generated revenue of S$32.4m and net profit of $3.6m.

The recovery was due to a broad-based pickup in business in ISDN’s key markets of Singapore, China and Vietnam.

4M20 net profit accounted for 80.4% of our FY20F net profit.

The company also disclosed that orders received year-to-date amounted to S$95m.


Introducing anti-Covid-19 products
ISDN recently partnered with Germany-based ERST Project GmbH to introduce two disinfectant technologies designed to aid the transition to a post-pandemic environment.

These are

a) Waterliq, a safe, water-based disinfectant capable of deployment throughhumidifiers in human-safe fine droplets, and is able to kill 99.99% of pathogens; and

b) Erstotizer, a state-of-the-art disinfecting coating that can keep surfaces virus-free for 6-24 months.

Since announcing these two products, ISDN has already secured two commercial deployments, one at major dormitory provider Centurion Corporation and another at First Sight International Pte Ltd, an interior designer.

Reiterate Add; higher S$0.28 TP
Given the lack of detailed financials, we assume gross margin improvement as the primary reason for the better-than-expected 1Q20 performance.

49% jump in FY20 forecast

williamtng4.14"With our revised gross margin expectations, our FY20-22F net profit forecasts increase by 49.2%/20.1%/11.3%.

"At an unchanged CY21F P/E of 10x (c.57% discount to its global peers), our target price rises to S$0.28 (S$0.23 previously)
."

-- William Tng, CFA (photo),
CGS-CIMB analyst

Potential re-rating catalysts for the stock could come from stronger-than-expected sales orders for its mainstay motion-control business and profit contribution from its clean energy segment.

Key downside risks are order delays, cost overruns in its energy business, further escalation in the US-China trade war, and worsening of the Covid-19 outbreak.


Full report here. 

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ct.leong@nextinsight.net (Leong Chan Teik) Mon, 01 Jun 2020 07:58:27 GMT http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13559-isdn-reiterate-add-with-higher-tp-of-s-0-28
OXLEY: Target 29 cents, big discount to RNAV 65 cents http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13557-oxley-rnav-65-cents-target-price-29-cents Excerpts from RHB report

Analysts: Jarick Seet & Lee Cai Ling

Keep BUY with a new SGD0.29 TP from SGD0.31. Oxley has entered into an expression of interest with a buyer for the sale of Chevron House’s retail and banking units for SGD315m.

Oxley

Share price: 
24 c

Target: 
29 c

The sale price is lower than we expected, possibly due to the current economic climate, which has been impacted by COVID-19’s spread.

Management said it will likely receive SGD200m once the sale is completed, which should further boost OHL’s balance sheet.


Great boost to balance sheet strength despite the lower selling price. The divestment is expected to be completed by 30 Jun with a refundable deposit of SGD3.15m being made.

Despite a lower selling price, we feel it is still in OHL’s favour to sell the asset, as it should still be making good profit.

Additionally, the SGD200m incoming from the sale should allow the group to shore up its balance sheet and quench investor’s fears on its debts.

It should also allow OHL to capture opportunities with better upsides in such a tough climate.

hotels10.17

Stevens Road hotels at full occupancy for April. OHL’s hotels at Stevens Road have been used as alternative quarantine sites for COVID-19 patients, and all rooms have been fully taken up.

With the 75% subsidy in labour costs from the Government, the group will likely still generate profit from this deal, in our view, due to the lower operating costs incurred.


Survival is key in such times. Management is still maintaining its sales target of 95-100% of its local portfolio by the end of 2020.

It also does not rule out lowering prices to attain faster sales, as OHL had entered the fray earlier than its peers at lower land prices.

Special Dividend?

chingchiatkwong11.17(L-R) Chairman & CEO Ching Chiat Kwong | Dy CEO Eric Low.
"Management is comfortable with its current cash position and is still keen to reward shareholders with a special dividend this year.

"Based on OHL’s track record, the key management team members, which own the majority of the group, have always opted for script dividends – hence, even with a special dividend being paid, OHL will likely be able to easily stump up cash for the minority shareholders
."

-- RHB 

The group’s overseas projects in Dublin (Ireland) and the UK are likely to be delayed by 3-6 months, depending on whether there is an extension to the global lockdown due to COVID-19.

Due to the delays in projects and drop in margins expected for local developments, as well as a lower selling price for Chevron House, we lower our RNAV valuation to SGD0.65 from SGD0.69.

Our TP is lowered to SGD0.29 based on a 55% discount to RNAV, but we retain our current recommendation for this counter.

Key risks: A recession, as well as a crash in property prices.


Full report here. 

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ct.leong@nextinsight.net (Leong Chan Teik) Sun, 31 May 2020 06:02:23 GMT http://mail.nextinsight.net/story-archive-mainmenu-60/943-2020/13557-oxley-rnav-65-cents-target-price-29-cents

Share Prices

Counter NameLastChange
AEM Holdings3.2700.140
AusGroup0.028-
Avi-Tech Electronics0.3950.005
Best World Int.1.360-
CEI0.8850.005
China Sunsine0.385-
CNMC GoldMine0.205-
CSE Global0.4900.005
Food Empire0.5300.010
Golden Energy0.173-0.002
GSS Energy0.0760.001
ISDN Holdings0.2350.005
ISOTeam0.1330.004
IX Biopharma0.255-0.010
JB Foods0.5450.055
KSH Holdings0.3500.005
Medtecs Intl0.240-0.005
Moya Asia0.064-
Nordic Group0.230-0.005
Oxley Holdings0.255-0.005
Procurri0.3200.020
REX International0.1910.004
Riverstone2.3200.040
Roxy-Pacific0.355-
Sing Holdings0.3500.015
SingMedical0.2500.005
Straco Corp.0.5150.005
Sunningdale Tech1.0700.040
Sunpower Group0.4550.010
The Trendlines0.1110.001
Tiong Seng0.163-0.007
Uni-Asia Group0.570-
Yangzijiang Shipbldg1.0300.020

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