Wednesday, July 16, 2014

King Wan - My CNAV Analysis From Its 2014 Annual Report

King Wan Corporation
Before I proceed, just like to share the following two points :
1. I am vested with King Wan since June 2014 (I bought it as $0.335), click here to check out why I've invested in this stock.
2. I've just attended the Value Investing Mastery Course (from Big Fat Purse) last weekend and wanted to put what I've learned (CNAV, Conservative Net Asset Value) into practice (even though retrospectively on this particular stock). Click here to see my earlier post on my open review of the course.
Yesterday, I've received the 2014 Annual Report from King Wan Corporation and decided to do a 15 minutes "homework" in calculating the CNAV to facilitate me in making future decision (e.g. selling or accumulating) on King Wan (554.SI).
As per my earlier post, I intended to hold King Wan on long term basis (in years) and hence would not making any short term decision with my findings of CNAV Analysis. Hence, this is just to share my "homework" openly ;-)

The Key Quantitative Indicators of CNAV Strategy:

Net Asset Value (NAV)                             = $0.25
Conservative Net Asset Value (CNAV2)  = $0.07
Current Price                                              = $0.35
Discount For CNAV2                                = -398%

Conclusion : Since it is a negative "Discount for CNAV2", it means that the stock is traded at premium. In fact, it is already traded at a premium (40% higher) even compared with the less conservative indicator, NAV. So, if basing on the CNAV strategy, this stock would only be in my watch-list (i.e. not a "buy" signal).
The P.O.F Scores of CNAV Strategy: 
Profitability Score         = 0 (With the PE ratio of 18.1, slightly over than the average of 15)

Operational Efficiency = 1 (with three consecutive years of positive operating cashflow)

Financial Efficiency     = 1 (Debt To Equity Ratio of 56%)

Conclusion : Even with the score of 2 (out of 3) but since the PE Ratio is only slightly over the average, I will still consider it a good set of POF indicators.
In short, if I were to apply the CNAV strategy on this stock, I would not buy it NOW but will keep it in my watch-list until it has a positive discount for CNAV2.  

Having said that, since I have already vested in it, I will keep to my original intention of long term holding for the following two reasons:

1. Dividend Yield (The company is proposing 1.5 cents of Dividend to be paid in August 2014)

2. Potential Future Growths (from the latest announcement on 15th Jul 2014, King Wan Corporation has clinched 5 new Mechanical & Electrical Projects worth a total $25.5 millions).

So, that is it! My first brief CNAV analysis (retrospectively)!



  1. Cool stuff! Thanks for taking time to do the analysis :)

    As we mentioned in the course, a stock which fails CNAV may not be a bad stock, especially the earnings is expected to be good.

    So you might be right in time to come and make a killing! Huat ah!

    1. Hi Alvin, thanks. Intended do more regular CNAV assessment on some of the stocks... stay tuned ;-)

      Let's HUAT together!

  2. While we do see top line growth, bottom line growth has been been trending downwards these few years especially with foreign labor policy shifts. I would think for the core business of King Wan, it will definitely be facing pretty tough times. That said, the company is trading at pretty high multiples already, P/E 17.9x, normalised EV/EBITDA 13.0x and normalised FCF yield 3.23%

    1. Value-edge : thanks for the additional input and assessment, appreciated that..


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