Sharing my pro and con analysis, and hope to receive feedbacks:
Pro
1. Debt-free; thus immune to rising interest rate
2. At 19.5 cents, Cash, AR and inventory are substantial and forms almost the current market capitalization. The balance sheet is "clean" as Cash is liquid, bad debts has been minimal, little sign of inventory impairment. The rest of the balance sheet is "free", of which the investment properties are the interesting asset due to legacy costing and purchase.
3. Investment properties are recorded at cost/ valuation, with fair valuation gain of minimum $50m as at Jun 2014
4. If the company revalue the properties at valuation, RNAV will be easily $250m. With a market capitalization of $120+m, the PB is 0.5
5. Dividend approximately 5%
Con
1. "Family-Controlled" business with 55%
2. Steel business with low profit margin
3. Had share purchase in the past, but has since ceased since 2014. Management should use the excess cash to share repurchase so as to improve ROE, EPS, NTA/share
TulipBubble, yeah, been looking at this on & off but don't feel compelled to invest mainly becos the steel biz is challenging. There are a couple of stock ideas (such as Fu Yu Corp and Resources Prima) that have better risk-reward payoffs, Imho.
Demand for Hupsteel's products will be so-so and there is not big impact from the redevelopment at 6 Kim Chuan site.
