Why I like Swing Media

  I like Swing Media for the following reasons : 1. closing price on 31st dec was 10.1 cts. Its nav is     44.7 cts. Its trading at only 22.5% of its nav. 2. despite the tough economic environment in the      last few years, the company has been able to      improve its top n bottom line. FY 2010 revenue : S$126 mil;  profit : S$6.82 mil FY 2011 revenue : S$133 mil;  profit : S$ 7.6 mil FY 2012 revenue : S$136.7 mil;  profit : S$ 8.3 mil   1/2 year 2013 (apr to sept 2012): revenue : S$69.7; profit : S$5.2 mil. If we use a straight line projection the full year profit would be S$10.4 mil. The key point here is that the company has been consistently profitable in the last few years despite the difficult economic environment. 3. based on current price of 10.1 cts it is trading on a  p/e of 4.6 and is capitalised at S$37.6 mil. If the projected profit of S$10.4 mil is correct the p/e would be only 3.6. A company w growth in top n bottom lines trading at a p/e of 3.6 is certainly under-valued. 4. closing price on 31st dec was 10.1 cts.  the 52 weeks low was 9 cts and high is 13.4 cts. Its trading slightly above 10% of the historical low thereby implying that the risk in investing in this company is low. 5. company has consistently declared dividend in  the last few years. Dividend declared for financial year 2012 was 0.19 cts which give a dividend yield of 1.9% based on closing price of 10.1 cts. 6. management seems quite bullish on their  business prospects. I quote some from their latest management comments : i) looking ahead, business conditions are improving slightly as the group  benefits from industry consolidation, ii) the group also expects to reap rewards from its cost optimisation and increased marketing efforts, iii) the group believes that its core products; DVD-Rs and CD-Rs will remain in demand .. Iv) The group also expects increased demand for dual layer DVD-Rs and BD-Rs (blue ray discs); and  v) the group has already booked the income from the  five previously completed systems… its China subsidiary has secured another 200 solar-powered energy systems order from PetroChina petrol stattions. This brings the group's portfolio of such systems to 300 which is expected to generate an estimated profit of RMB 30  million over the next two years. 7. Notes on the company : a. the company was listed on the 1st feb 2002 b. its IPO price was 70 cts per share c. its operations are headquartered in Hongkong with manufacturing facilities in Hongkong, China n  Taiwan. For more details, pls read up on the company. Above are just my views and ways of looking at things. Its not intended to ask you to buy or sell. You are advise  to do your own diligent before you make a decision. Based on the above I like the counter and am heavily vested. I wish all of you all the best.

Thanks Josephyeo,
It sure look undervalued. The company have been expanding into the Clean Energy biz which is expected to generate RMB30million in profit for the next 2 years. Added small position which i intend to hold for longer term......
However the clean energy (solar) biz look more like project based rather than recurring basis. What is your view on the longer term?
 
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[josephyeo 01-01-2013]:

  I like Swing Media for the following reasons :   1. closing price on 31st dec was 10.1 cts. Its nav is     44.7 cts. Its trading at only 22.5% of its nav.   2. despite the tough economic environment in the      last few years, the company has been able to      improve its top n bottom line.   FY 2010 revenue : S$126 mil;  profit : S$6.82 mil FY 2011 revenue : S$133 mil;  profit : S$ 7.6 mil FY 2012 revenue : S$136.7 mil;  profit : S$ 8.3 mil   1/2 year 2013 (apr to sept 2012): revenue : S$69.7; profit : S$5.2 mil. If we use a straight line projection the full year profit would be S$10.4 mil.   The key point here is that the company has been consistently profitable in the last few years despite the difficult economic environment.   3. based on current price of 10.1 cts it is trading on a  p/e of 4.6 and is capitalised at S$37.6 mil. If the projected profit of S$10.4 mil is correct the p/e would be only 3.6. A company w growth in top n bottom lines trading at a p/e of 3.6 is certainly under-valued.   4. closing price on 31st dec was 10.1 cts.  the 52 weeks low was 9 cts and high is 13.4 cts. Its trading slightly above 10% of the historical low thereby implying that the risk in investing in this company is low.   5. company has consistently declared dividend in  the last few years. Dividend declared for financial year 2012 was 0.19 cts which give a dividend yield of 1.9% based on closing price of 10.1 cts.   6. management seems quite bullish on their  business prospects. I quote some from their latest management comments : i) looking ahead, business conditions are improving slightly as the group  benefits from industry consolidation, ii) the group also expects to reap rewards from its cost optimisation and increased marketing efforts, iii) the group believes that its core products; DVD-Rs and CD-Rs will remain in demand .. Iv) The group also expects increased demand for dual layer DVD-Rs and BD-Rs (blue ray discs); and  v) the group has already booked the income from the  five previously completed systems… its China subsidiary has secured another 200 solar-powered energy systems order from PetroChina petrol stattions. This brings the group's portfolio of such systems to 300 which is expected to generate an estimated profit of RMB 30  million over the next two years.   7. Notes on the company : a. the company was listed on the 1st feb 2002 b. its IPO price was 70 cts per share c. its operations are headquartered in Hongkong with manufacturing facilities in Hongkong, China n  Taiwan.   For more details, pls read up on the company.   Above are just my views and ways of looking at things. Its not intended to ask you to buy or sell. You are advise  to do your own diligent before you make a decision. Based on the above I like the counter and am heavily vested. I wish all of you all the best.          

dear erelation, you are probably right in saying that this Clean Energy (solar) biz is project based. The thing i like about this new business is that there is a tremendous market going ahead as green energy seems to be the way to go. Further their link-up w PetrolChina will give them alot of credibility going ahead. How many more they can instore now n later is anybody guess but being the first mover will give them an advantage in the days to come. Further as the system aged there will be a need for renewal. I would also think that there have to be a service n maintainance contract somewhere n this could also be a source of recurring income. I stand corrected on this point. I paste below 2 of their latest announcements for your perusal :
Press Release
GREEN ENERGY BUSINESS GETS FURTHER BOOST WITH AGREEMENT FOR 200 MORE SOLAR ENERGY SYSTEMS FIRMED UP Singapore,
1st November 2012 – Swing Media Technology Group Limited (“Swing Media”)’s wholly-owned subsidiary, 瑞仁（上海）环保设备有限公司 (“Ruiren Shanghai”) has entered into a sale and purchase agreement dated 1 November 2012 with Shanghai CNPC Enterprise Group Co., Ltd. (上海中油企业集团有限公司) (“Shanghai CNPC”) to install 200 solarpowered energy systems for PetroChina petrol stations in China. This agreement is pursuant to the Co-operation Agreement between Shanghai Hui Yang New Energy Technology Co., Ltd (上海汇阳新能源科技有限公司) (“Shanghai Hui Yang”)and Shanghai CNPC, a company associated with PetroChina Company Limited (中国石油天然气 股份有限公司), in connection with the provision of turn-key installations of solar powered energy systems to 500 petrol stations in PRC (the “Co-operation Agreement”).
The Co-operation Agreement has been assigned by Shanghai Hui Yang to Ruiren Shanghai. (Please refer to the Company’s announcements on 5 January 2011, 1 November 2011, 15 May 2012, 26 June 2012 and 19 July 2012, and the press releases dated 14 February 2011 and 1 November 2011.)
Said Swing Media’s CEO, Mr. Matthew Hui, “We are pleased to finalize the agreement for another 200 installations. This puts our new wing of business in green energy on a very firm footing and provides us a sustainable source of income for the future.”
The outlook for the clean energy industry in China is very promising as the country seeks to reduce pollution. Based on its 12th Five-Year Plan for Economic and Social Development (2011-2015), China will spend US$473.1 billion on clean energy investments. It targets to have 20 percent of its total energy demand met by renewable energy by 2020. The country’s National Energy Administration is also planning to offer subsidies of about RMB 0.40 to RMB 0.60 for each kilowatt-hour of distributed solar power. In addition, recent media reports suggest that the country is planning to quadruple its 2015 solar power target to 21 GW of installed capacity.
Adds Mr. Hui, “We are extremely excited about the potential of our green energy business. Our current portfolio of 300 installations is expected to contribute an estimated profit of RMB 30 million within the next two years (approximately 70% of the Group’s current annual profit). We hope to enter into an agreement for the remaining 200 energy systems soon and, are confident of winning more such contracts. The country’s drive towards sustainable energy and, our capability to tap on the growing demand will enable us to significantly improve our earnings and enhance shareholder value.”
 
 
Press Release
SWING MEDIA REMAINS PROFITABLE IN DIFFICULT MARKET
Sales and Net profit continue to increase
Net gearing remains low
Contributions from green energy business kicks in
 
Singapore, 14 November 2012 – In the face of increasing global economic uncertainties, Mainboard-listed Swing Media Technology Group Limited (”Swing Media”) continued to grow its sales and profit for the half year ended 30 September 2012. (HK$ mn) 1H2012 1H2011 % change Sales 441.202 429.081 +2.82 Gross Profit 53.71 46.477 +15.57 Net Profit 32.649 32.263 +1.20 Net Gearing (x) 0.14 0.15 -6.67
Group sales rose 2.8% to HK$441.2 million while net profit increased 1.2% to HK$32.6 million. In its core businesses, the Group performed well as it managed to contain cost increases while growing sales. Consequently, gross margin increased 1.3 percentage points to 12.17%.
Both key products experienced increases in sales with DVD-R sales increasing 0.4% to HK$319.0 million and CD-R sales increasing 45.9% to HK$54.1 million. The jump in CD-R sales was primarily due to orders from a new customer.
Said CEO, Matthew Hui,"We are pleased to be able to continue our record of profitability since our listing in 2002. We are also glad to report continued progress in our green energy business, following the consolidation of the assets and businesses of Shanghai Hui Yang New Energy Technology Co., Ltd. into the Group.”
With the firming up of orders for another 200 solar-powered systems on 1 November 2012, Swing Media now has orders for the installation of 300 systems for PetroChina petrol stations across China. The Group expects to generate an estimated profit of RMB 30 million over the next two years from this venture and, has already booked in income from the completion of some of the systems.
In addition, the Group expects to sign contracts for another 200 installations in the near future. The Group’s basic earnings per ordinary share was 9.01 HK cents for the six months ended 30 September 2012. The Group’s net asset value per share was HK$2.85 as at 30 September 2012.
Group net gearing improved slightly to 0.14 times.

Good volume today. As at 1.18pm the volume is 13.3 mil. Last done at 10.6 cts. Appear to me that many weak holders have been taken off.

DMG reiterated its buy recommendation for this stock on 21 Nov 2012 with a target price of 24 cts.  The stock rose 2.3 cts on heavy volume today to close at 12.3 cts after a few months consolidation.
This company had undergone a re-organisation about a year ago and now has less than 400 million issued shares.
Some Historical Facts:
19-7-2010 – Rights Issue 1:2 @ 4.5 cts;  Issued 484 M shares
29-1-2011 – Placement Issue of 290 M shares @ 4.09 cts
Consolidation Exercise:  1,742 M shares consolidated into 348 M shares [5 à 1]
8-1-2011 – Placement Issue of 9 M shares @ 16.25 cts(S) bringing the number of issued shares to 357 M. FY 12 EPS = 14.3 cts (HK) or 2.1 cts (S)
Estimated EPS for FY 13 ending Mar 2013 is 18 cts(HK) or about 2.7 cts(S) giving a PE of 4x at 10.8 cts.
Positive Points:
Company expects core products – DVD-R & CD-R to remain in demand & also increased demand for dual layer DVD-Rs & BD-Rs(blue ray) to improve profitability.
1-11-2012 – Company secured another 200 solar powered energy systems (bringing total to 300) from Petrochina petrol stations. This is expected to generate estimated nett profit of HK$30 M over the next 2 years.
 
 

Swing Media today trade at a high of 16 cts. Close at 15.4 cts. It has finally reached the top volume area with 114 mil shares traded.
Cheers to those who have bought the shares.
I have sold about 20% of my holding n keeping the other 80%. Some funds/brokerage have set a target of 24cts per share. Hope they are right.
For those who have thoughts of buying, especially retail investors/punters, my advise is .. be careful and remember the rule that the higher you buy the higher the risks and lower the returns and vise versa.
May all be blessed !!!
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[josephyeo 02-01-2013]:

  I like Swing Media for the following reasons :   1. closing price on 31st dec was 10.1 cts. Its nav is     44.7 cts. Its trading at only 22.5% of its nav.   2. despite the tough economic environment in the      last few years, the company has been able to      improve its top n bottom line.   FY 2010 revenue : S$126 mil;  profit : S$6.82 mil FY 2011 revenue : S$133 mil;  profit : S$ 7.6 mil FY 2012 revenue : S$136.7 mil;  profit : S$ 8.3 mil   1/2 year 2013 (apr to sept 2012): revenue : S$69.7; profit : S$5.2 mil. If we use a straight line projection the full year profit would be S$10.4 mil.   The key point here is that the company has been consistently profitable in the last few years despite the difficult economic environment.   3. based on current price of 10.1 cts it is trading on a  p/e of 4.6 and is capitalised at S$37.6 mil. If the projected profit of S$10.4 mil is correct the p/e would be only 3.6. A company w growth in top n bottom lines trading at a p/e of 3.6 is certainly under-valued.   4. closing price on 31st dec was 10.1 cts.  the 52 weeks low was 9 cts and high is 13.4 cts. Its trading slightly above 10% of the historical low thereby implying that the risk in investing in this company is low.   5. company has consistently declared dividend in  the last few years. Dividend declared for financial year 2012 was 0.19 cts which give a dividend yield of 1.9% based on closing price of 10.1 cts.   6. management seems quite bullish on their  business prospects. I quote some from their latest management comments : i) looking ahead, business conditions are improving slightly as the group  benefits from industry consolidation, ii) the group also expects to reap rewards from its cost optimisation and increased marketing efforts, iii) the group believes that its core products; DVD-Rs and CD-Rs will remain in demand .. Iv) The group also expects increased demand for dual layer DVD-Rs and BD-Rs (blue ray discs); and  v) the group has already booked the income from the  five previously completed systems… its China subsidiary has secured another 200 solar-powered energy systems order from PetroChina petrol stattions. This brings the group's portfolio of such systems to 300 which is expected to generate an estimated profit of RMB 30  million over the next two years.   7. Notes on the company : a. the company was listed on the 1st feb 2002 b. its IPO price was 70 cts per share c. its operations are headquartered in Hongkong with manufacturing facilities in Hongkong, China n  Taiwan.   For more details, pls read up on the company.   Above are just my views and ways of looking at things. Its not intended to ask you to buy or sell. You are advise  to do your own diligent before you make a decision. Based on the above I like the counter and am heavily vested. I wish all of you all the best.