Sunday, January 28, 2007

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

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.

6 comments:

Mizore said...

The way you value a company is pretty wrong. You should finish reading The Intelligent Investor before posting any more, to avoid misleading people.

Fu Chin said...

Hi Mizore,

Thank you for your honest opinion.

Would you kindly elaborate further, regarding which areas are incorrect or whether the whole idea is wrong?

I must admit that I am still a novice, with only a couple of years of experiences...

Warm regards,
Fu Chin

Anonymous said...

it's a worthy blog, and do not be dishearthen by vested viewer

Lim Fu Chin said...

Hi Anonymous,

Thank you for the kind comments and encouragement.

I definitely need some now! :)

Warm regards,
Fu Chin

Anonymous said...

you give us price to your maximum price ratio, not price to IV....

-eu

Fu Chin said...

Hi eu,

Yes yes, you are right, it is not Price to IV, it is "Current Price to Max price I would buy at".

Thanks for pointing out the mistake.

Have fun investing.

Warm regards,
Fu Chin