Hi Tanya,
There are other cost that you haven't factor in....
1) Brokerage Fee at HK side.
2) Exchange Rate Risk
The exchange rate movement for HK vs S$ can be deadly..... it can significantly increase your profit or causes the transaction to run into losses. Take a look at the past 1 year movement of HK/S$
sg.finance.yahoo.com/q/bc?s=SGDHKD=X&t=1y&l=on&z=m&q=l&c=
The exchange rate ranges from 5.9 to 6.49...
In my opinion, 5,000 shares may not worth the trouble as during the transfer period of 6 - 8 weeks, we are basically out of the market. Can't sell if the price shoot up. I am more concern on the forex movement.
Regards
erelation
Company visit takeaways
Analyst: Carol Dou Tel: (8621) 5404 7225 ext.811
Whatâs New
We visit Techcomp Holdings last week. Here are the key takeaways.
Revenue grew at 21.0% CAGR in 2002-11. The total revenue reached USD154.1m in 2011, of which distribution and manufacturing business contributed about 68.8% and 31.2% of the total revenue respectively.About 67.9% of the revenue from distribution business was related to Hitachi High-Technologies in 2011. Its largest market, China, brought approximately 77% of the total revenue for the company in 2011. The company expects the total revenue will continue to grow at about 20% CAGR in the next few years driven by the strong growth in China, on rising concern over food safety, as well as government support and increasing investment in the science and technology, and R&D. This is highly achievable based on our industry check.
Net profit margin expected to improve to reasonable level in 2012. Given a relatively high entry barrier, the company has been able to retain a steady gross margin of about 30% in the past few years. Impacted by the IPO related expenses, the net margin stood at 5.4% in 2011, decreased significantly from 8.0% in 2010. The management expects the net margin will return to about 8% level in 2012, hence, the net earnings may increase significantly by over 60% yoy in 2012.
Growth strategies: a) Continue to growth through M&As and strategic alliances. b) Continue to expand distribution network in Asia and Europe; c) Integrating its newly acquired business; and d) Widening product offerings in Europe etc.
Net gearing and operating cash flow: Techcomp has a net debt position of USD21.2m at the end of 2011 (net gearing 33.6%), increased substantially from USD4.3m a year earlier. The Accounts receivable days is also increased from 123 days in 2010 to 156 days in 2011. Operating cash flow deteriorated from USD6.3m in 2010 to USD-13.8m in 2011. According to the management, the company expects to finance its future M&As and expansion activities with cash and bank borrowings. We therefore expect the debt level may continue to increase.
Valuation / recommendation.
Based on consensus EPS 2012 estimates of USD 0.055, Techcomâs HK shares are currently trading at 7x 2012PE, considerably low compared to its scientific equipment peers listed in US (about 16x 2012PE). At present, the HK shares are trading at a premium (about 12.7%) to its Singapore shares.
Risks and concerns: a) Universities and government R&D centers in China are the major customers of Techcomp; given the limited client base, competition between Techcomp and foreign brands are intensifying. b) Rely heavily on the business partnership with Hitachi High-Technologies. c)Newly acquired European business unlikely to turn profitable in the short-term given the weak economic condition of the European market. d) Risks concerning future acquisitions and new product launches. e) Possibility of continued weakening of the operating cash flow.
Techcomp is trading at HK 3.18 in Hong Kong with over 400,000 shares traded.
In Singapore, there is no trading with sellers at 44 cents (HK 2.64)
OMG....
NextInsight
a hub for serious investors
