Value Investment on Singapore Stock Exchange - Valuation Report of Chuan Hup

Evaluated on 31-Jan-2007 and I am currently invested in this company.

Note: Exchange rate assumption: 1 USD = 1.5 SGD

About the company:

1. Core Business: It was founded in 1970 as a tug and barge service provider for the PSA. On 30 September 2005, it completed the sale of its marine businesses to Scomi Marine Bhd. It is now a a pure investment holding company with substantial interests in the marine, electronic manufacturing services and property sectors.
2. Date of Listing: Dec-1983
3. What I like about this company: It has got very diversed investments, across marine, services and properties sectors. In my opinion, with the risks spreaded out, it is very unlikely that its investments will all turn sour at once. Also, I like the chairman (non-exec). Furthermore, one of the exec directors (previous MD) is also a substantial shareholder. Its profits and net tangible assets has been increasing steadily last 4 years, before it decided to sell away its marine operations.
4. What I do not like about this company: It is in its initial years as a full investment holding company. Thus, there is no historical performance to benchmark it against.
5. Competitive advantage (if any): None at the moment, this is risky bet... I am betting it to be a great instutitional investor.

Valuation Statistics (base on 1Q07 financial report)

1. Earning Per Share: S$0.018 (annualized, converted from USD)
2. Price/Earnings ratio : 18.06 (annualized, excl subsidary dividends, not calculated in 1Q)
3. Operating Profit: 52.27% (excluding other income)
4. Return on Equity Ratio: 0.0039
5. Current Ratio: 3.97
6. Cash & Receivables per share: S$0.12 (converted from USD)
7. Debt/Total Equity Ratio: 0.08
8. Net Tangible Assets: S$0.381 (converted from USD)

Conclusion

1. Price: $0.33 (31-Jan-07)
2. Estimated Fair Price: $0.471 (highly subjective)
3. Maximum Price I would purchase at: $0.377 (highly subjective)
4. Price to Estimated Fair Price: 70%
5. Final word: To me, this seems to be another great business to own.

Information sources

1. Chuan Hup company website at http://www.chuanhup.com.sg/
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.