accumulate - ld 0.575, tp 0.70, upside 21%
- undervalued pb < 1 and pe 6.2
- fundamentally sound - china manufacturing figures ok
- attractive and growing dividends with low payout ratio
- market cap S$ 90.39 mm, float 16.69%
- last done S$ 0.575
- pe 6.228, pb 0.865, ev/ebitda 3.111
- dividend yield 3.47%, dividend 5yr cagr 24% consistent, payout 33%
- revenue 5yr cagr 4.8%, earnings 5yr cagr 13.4%, uptrend
- total debt / equity 33%, current ratio 1.49
- roe 14.7%, roa 6.3%
- strong positive cash flow, stable and growing cash in balance sheet
- shareholders: Hanwell Holdings Limited 63.95%, See Moon Loh 15%
operations
- manufactures and sells corrugated paper packaging products such as corrugated boards and cartons for the packaging of electronics and electrical, food, pharmaceutical and other products
- 85% of FY16 revenue was from within China, with the rest derived from Singapore
- For FY15, three largest customer sectors were Printing, Publishing & Converters (40%), Medical, Pharmaceutical & Chemical (27%) and Electronics & Electrical (20%)
- five facilities in China – namely, Suzhou, Jiangsu province; Hefei, Anhui province; Nantong Rugao and Natong Tongzhou, both in Jiangsu province and lastly, Tianjin
outlook
- annual report 2016
- We expect the operating environment in China and Singapore to remain challenging
- For our Singapore operations, raw material costs may increase if the exchange rate of US Dollar against Singapore Dollar is strengthened further
- In China, with increased environmental awareness and measures introduced by the Chinese government to deal with pollution, we expect the cost of raw materials and processing costs to increase
- china pmi > 50, china consumer sentiment > 100
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