Relatively small company which is growing rapidly its profits (based on 4Q turnaround). Will need at least the next quarter's results to convince the market that it is worth a bet. Like many small caps, this one can be a highly profitable investment if almost all the stars are aligned:
1) Continuous good results reported.
2) Bullish market sentiment.
3) Dividend payout (none for FY2010, despite big cash pile which probably is being reserved for capex).
4) Share buyback - by company or management.
5) Initiation of coverage by analysts (currently zero, excluding CIMB's random commentary).
If all the above are present, the stock could go up 100% from 7.5 cents now to 15 cents.
Question, if the cash onhand is equal to the market capitalization and it is way undervalued in term of NTA. Why didn't the insider privatized the company or even embark on cash buyback to enhance shareholders value?
If i am majority shareholder, I will raise cash/loan or whatever to privatized this company offering 10 cents to the market which is way above current price of 6.5 cents. Once, in control, I will use the cash of 13.2 cents to pay back bank/funder. Even include a 10% interest for loan, it is still a good margin and safe money to be make. (provided the figure is all correct) My concern is that this is a small company in a highly competitive textile industry. It may not have pricing power and competitive advantage against the bigger giant. Any comment and further opinion will be appreciated. Quote
erelation: I myself am puzzled to as to why the management has not taken any effort to boost its stock valuation via share buyback or a dividend payout. Maybe they see the stock market downturn as something that affects all stocks, so they will just ride the volatility
On the other hand, who knows, they may be planning some course of action. The thing for us investors is we can't know the reality. We can only take calculated risks (of buying or not buying).
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