Value Investment on Singapore Stock Exchange - Valuation Report of HTL International

Value Investment on Singapore Stock Exchange - Valuation Report of HTL International

Evaluated on 28-Jan-2007 and I am currently not invested in this company.

About the company:

1. Core Business: Manufacturer of leather sofas and leather upholstery hides since 1976, with facilities in China, Malaysia and Singapore.
2. Date of Listing: 1993
3. What I like about this company: Its Revenue, Profit and EPS has been increasing steadily over the last 5 years. Its customers are mainly from overseas, with Europe and North America accounting for more than 70% of sales. The management are also the substantial shareholders. The management focus on the development of its 'skills and capabilities' (know-how) of its business.
4. What I do not like about this company: Inventories form about 54.8% of its current assets and I am not sure if it is the norm in the industry.
5. Competitive advantage (if any): Global footprint, serving it as a natural barrier to entry of its business?

Valuation Statistics (base on 3Q06 financial report)

1. Earning Per Share: $0.129 (annualized)
2. Price/Earnings ratio : 7.83 (annualized)
3. Operating Profit: 10.17%
4. Return on Equity Ratio: 18.00
5. Current Ratio: 2.62
6. Cash & Receivables per share: $0.27
7. Debt/Total Equity Ratio: 0.684
8. Net Tangible Assets: $0.537

Conclusion

1. Price: $1.01 (26-Jan-07)
2. Intrinsic Value: $1.18 (highly subjective)
3. Maximum Price I would purchase at: $0.95 (highly subjective)
4. Current Price to Max price I would buy at: 106%
5. Final word: This seems to be a great business to own. I would like keep it in my watchlist. At 106% of Price to IV, it would be slightly expensive for me to consider any purchase at the moment.

Information sources

1. HTL company website at http://www.htlinternational.com/
2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

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