Wednesday, April 21, 2010

A Quick Look On TOMEI





Result looking impressive year after year. Have added TOMEI into my portfolio the other day at a price of RM0.52.

Trading at current price of RM0.53, which mean :-

EPS = 14.48sen
PE = 3.67sen
My way of calculate FV = 4.5 X 14.48 = RM0.65

I expect a minimum of 2.5sen dividend to be declared end of this month or early May 2010. That represent a 4.7% at least and 52 week low of Tomei price stood at RM0.435, so the down side should be quite minimum.

Looking at the above it passes all my searching criteria in picking stocks, so should be worth considering.

23 comments:

K C said...

Horse, I like this counter, Tomei, primarily because of its balance sheet figures, besides its good reported earnings.It has a NTA of RM1.01 per share and with the price today at 53 sen, the Price is only half of its NTA. More interestingly, if you ignore its non-current asset which is supposed to be less liquid, the NTA of shareholders' equity less non-current assets is 87 sen per share, still way above its market price! This is what Warren Buffet calls the margin of safety. However, it should be pointed out that most of its current asset is in inventory, but hopeful in gold and appreciating. The problem with low valuation of Tomei, I think it is because of its poor cash flows from operations.

horse said...

KC,

You indeed drill down well on your analysis on Tomei and in-depth as well. I too notice they have poor cash flows especially in year 2006 & 2007, recent years have been improving and in fact in the better footing now comparing previous years.
They would be able to give higher dividend this time round, (around 5sen) judging on better earning by 20% increased in net profit.
Good analysis KC. In fact, if anyone were to stick to profit company, investment in stock market become must easier and profitable, rather than speculating end up losing hard earn money. Once you stick on it, you will never wrong badly. It is just simple as that, source for undervalue, once it no longer exist then is time to make a halt.
I presume you must be doing very well in stock since you know what to look for. Bravo bro...keep up the good work. Share your good stocks here like hng if possible.

K C said...

Horse, where did you get the information that Tomei will be distributing a dividend of 5 sen for this year? If it is true, it shows Tomei has the good free cash flows now and there is no more doubt that this counter is an excellent investment and I will definitely buy a lot more.
Horse, credit should be given to you in identifying the good counters. I will do my part in analysing them in details. If you are interested, I will post some of my favourites on the web for discussions purpose.
Cheers

horse said...

KC,

Yes, please do, post your counters, we can exchange experience and information for sharing purpose.

About the 5sen dividend on Tomei, i am only guessing, not certain. Take a look at her previous dividend which i posted, 2007 & 2008 5sen was declared & 2009 was 2.5sen. As mentioned with the improved earning, i hope the div is back on track again at 5sen.

horse said...

Should expect Yilai to make div announcement this week of 6sen.

hng - can start liquidating. :)

Anonymous said...

Horse

I'm still waiting for Yilai to declare its dividend by this week, hopefully can reap higher profit margin.

About Tomei, i'm still in the midst of accumulating more. I personally expect Tomei to declare dividend of 3sen net, based on 20% payout.

horse said...

ya, it does make sense to base on 20% payout as the previous year payout is at the same quantum. I in fact be more optimistic that her payout be raised to 50% as in 2007. Lets hope for the best. :)

Anonymous said...

horse

Tomei need to conserve more capital to expand its business. This is judging from its recent raise capital via 10% private placement.

Although Tomei have high NTA of 1.01, but it also have very high gearing ratio due to its capital intensive business nature. However, if compare to its peer, Poh Kong, tomei deserve to trade at least above 4 x PE + 3sen net dividend (5.5% yield).

ccdev said...

yilai today vol much higher than normal. maybe expect the dividend news, any surprise should be good.

horse said...

it is indeed a good step that Tomei offer a private placement instead of right issue to raise fund. Offer price at 50sen and a dilution of 10% is already well absorb in the market as reflected in current share price. As i believed, private placement is normally have a tendency of long engagement with the company because only small group of ppl benefited with a discounted price. This is the carrot to compensate the buyers. Furthermore, only approx 7m was raised which in turn represent 5sen per share. Giving out this as div and retaining profit for business expansion also could be a workable chooice. (just my guess, do not take as good. :p)

Yes, trading at 4.5 x PE comparing to its peer should not be too much to ask for. You are absolutely right there. :)

Anonymous said...

horse

Tomei original IPO was at 91sen, private placement at 50sen already at deep discount compared to those IPO during 2006.

As mention before, Tomei share should have limited downside, even with current closing price of 54.5sen, tomei still offer relative good margin of safety to enter especially if Tomei declare at least 3sen net dividend which may serve as catalyst to spurt share higher.

I have also in today, increase further stake of Tomei; bought Tomei at 54-54.5sen.

Update portfolio + ultramargin line

1. Pharma 63.7% (cost: RM 4.30)
2. Tomei 45.4% (cost 54.5 sen)
3. TH plantation 26.6% (cost: 1.56)
4. Keladi 25% (cost: 15.7sen)
5. CCM Duopharma 26% (cost 2.39)
6. Yilai 25.6% (cost 77.5sen)
7. Cresbld 4.9% (cost 73sen)


Second portfolio + margin line
1. CCM duopharma 42.5% (cost 2.40)
2. Keladi 28.2% (cost: 16.2sen)
3. Chuan 16.2% (cost 60.5sen

Anonymous said...

ccdev

Have you hold any yilai?

my portfolio currently holding 25.6% at average price 77.5sen, expecting 6sen dividend to be declare soon.

horse said...

7230 TOMEI TOMEI CONSOLIDATED BHD
First & Final Single Tier Dividend 3.0 Sen T.E.

Entitlement Details:
A First and Final Single Tier Tax exempt Dividend of 3.0 sen per ordinary share
in respect of the financial year ended 31 December 2009.


Entitlement Type: First & Final Dividend
Entitlement Date and Time: 21/05/2010 05:00 PM
Year Ending/Period Ending/Ended Date: 31/12/2009
EX Date: 19/05/2010
To SCANS Date:
Payment Date: 04/06/2010

hng,
3sen TE. !!! :)

K C said...

Tomei's financial performance and health is comparable to Poh Kong. Pok Kong commands a higher price probably due to its higher market capitalization of 2.4X that of Tomei, better cash flows per share and arguably lower liability to equity of 0.7 compared to 1.1 of Tomei. Arguable because Tomei produces a higher ROE of 15% against 11% of Poh Kong precisely because of its higher leverage. With Tomei's EBIT of 5.3 times interest, I think Tomei should not have problem of servicing its debt. Hence sometimes higher borrowings (to a limit) in a profitable earning environment may not be a bad thing. Horse new information that Tomei gives a dividend of 3 sen, or 5.6% dividend yield which is double that of bank interest, is indeed a good news.

ccdev said...

good for you man, your tomei! no hng, i dont have any yilai, i was kiasu and wanted to get at 'lower' price but never reach my target. but reason why i may sound happy is bcos i did get some tomei, sold some for profit just now. enough for small lunch but the lesson is more 'delicious'.

hng,from a technical viewpoint, you know why the price spurt to 70c around late feb and early march?

horse said...

Good one KC, comparing to its peer is where we should do for an investor. As you mentioned the ROE for Tomei is 15% and it is commendable comparing with PohKong, servicing debt should not be a problem. The only worry is the gearing is just a little bit too high and deep comparing to PohKong. Its current short term liability stood at almost 0.78sen per share comparing it net worth per share of almost RM1, it about 78% to 80% which is quite alarming. I would say if this can reduce to 50% it will be in a very ideal state. As for PohKong, it is in a better position in handling debt issue as it command a lower gearing at about 34sen ps which stand < 50% of net worth. IN a nut shell Tomei has to command higher income in future to pare down the loan & must be able to handle/control well on it ratio on short term loan, in which at current ROE 15% should be quite capable & manageable. As hng mentioned, TOmei nature of business require cash intensive, this leave it no choice to have high gearing. SO long as it maintain higher ROE, think it would still be able to maintain a healthy BS. That is why giving a 4.5x PE to Tomei for it FV should be achievable. ANything above that is a bonus. :)

Anonymous said...

ccdev

I have no idea why sudden surge of Tomei share price to up to 70sen in Feb/ Mar. Perhaps, it could be due to market maker activity to push share higher to entice investor to subscribe its 10% private placement at 50sen/share. Anyway, this is beyond my scope to study on why there is such movement.

Good to know you also own Tomei. Current price of 56.5sen still have potential to go higher especially nearer to it ex-date. Nevertheless, i've sold some Tomei at 56.5sen to realize some handsome contra profit first :D)

Anonymous said...

Sold more tomei at 57sen, realize higher contra profit :D)

horse said...

Sold my Tomei as well :)

Anonymous said...

Today sold off remaining TH plant at 1.58, Sold partial Tomei at 56.5-57sen, realize all paper profit. Portfolio have today added two new stocks: Manulife and Nihsin; bought at 2.65 and 21sen respectively.

Update portfolio + ultramargin line

1. Pharma 63.7% (cost: RM 4.30)
2. Manulife 27.4% (cost 2.65)
3. Tomei 25% (cost 54.5 sen)
4. Keladi 25% (cost: 15.7sen)
5. CCM Duopharma 26% (cost 2.39)
6. Yilai 25.6% (cost 77.5sen)
7. Nihsin 12% (cost 21sen)
7. Cresbld 4.9% (cost 73sen)


Second portfolio + margin line
1. CCM duopharma 42.5% (cost 2.40)
2. Keladi 28.2% (cost: 16.2sen)
3. Chuan 16.2% (cost 60.5sen

K C said...

I wonder one can make money by doing frequent trading in the stock market in view of the transaction costs. Say you buy 10000 shares of Tomei at 56 sen and contra off at 55 sen or 57 sen. Assuming total brokerage and stamp duty of about 0.55%.
Buy 10000 at 0.56 = 5631
Sell 10000 at 0.57 = 5669
Profit = 38
Or sell at 0.55 = 5470
Loss 161
One makes only $38 but lose $161 if Tomei goes up or down by the same amount of 1 Sen; or your expected return is 0.5*(+38-161)=-62
In fact $62 will be the expected loss in transaction costs as within the short contra period, share price of Tomei is expected to stay put at 56 sen. How to make money in the long run?

Unknown said...

KC,
the brokerage is negotiable, try ask for lower rate from yr broker house.
Intraday rate is normally 0.1%, even with 1sen up there is still profit.
If it within contra period then the charges is higher, you might need higher spread like 1.5sen to make profit.
Same quantity selling at 0.55 & 0.57 respectively, will never make money is you gotten then at 0.56. Unless your portion selling at 0.57 is higher, like 80% sell at 0.57 and 20% sell at 0.55, there migth be some profit there.

Anonymous said...

Sold off all Tomei at 57.5-58.5sen, realize higher paper profit :D)

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