Tuesday, March 8, 2016

Hock Lian Seng - My CNAV Analysis

It has been awhile since my last CNAV Analysis. Recently, I have done a quick stock filtering (through SGX's StockFacts tool) to identify those stocks that have decent dividend yield (if you've not already know, my focus of investment is income investing). One stock caught my eyes and I've proceeded to do a quick CNAV Analysis to probe further. Hence this post. 

The stock that I am talking about is Hock Lian Seng (J2T), an investment holding company, primarily provides civil engineering services to public and private sectors in Singapore

The Key Quantitative Indicators of CNAV Strategy (Basing on the Financial Statement dated 24th Feb 2016 for the year ended 31st Dec 2015:

Net Asset Value (NAV) = $0.435
Conservative Net Asset Value (CNAV2) = $0.344
Current Price = $0.39
Discount For CNAV2 = -13%

Conclusion : From the price's perspective, it is traded above the CNAV2 price but below the NAV price. It also means that it is a potential stock worth monitoring. 

The P.O.F Scores of CNAV Strategy:
Profitability Score = 1 (With the PE ratio of 5.6)

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

Financial Efficiency = 1 (Debt To Equity Ratio of 54%)

Conclusion : A perfect POF indicators.
Other information:
1. For the FY 2015, the revenue has dropped by 33.2% and profit was dropped by 49.5% due to poorer performance in Property Development segment.
2. The company has a strong Balance Sheet
3. As at 31 December 2015, the Group’s order book for on-going projects of civil engineering segment was approximately $382 million for the Maxwell station, Changi Airport project and Stabling at Gali Batu Depot.

4. The company has declared $0.025 dividend (6.4% Dividend Yield), to be paid on 20th May 2016 (XD on 3th May 2016).

Click here for the Financial Statement!
In short, I will keep Hock Lian Seng in my CNAV2 watch list and will consider if it ever hit the range of $0.35 to $0.37 ;-)  

Cheers! 

2 comments:

  1. Hock Lian Seng also pass my Scorecard. I believe its just an extension of your CNAV Analysis. Nevertheless, this stock is something I bought and I sold during 2011 till 2012, and I bought again last year and I still thinking if I should add.

    In short, I believe my targeted entry price is also around your range - below 0.385.

    For many years now, the stock has been performing. When the construction order was reduced, it went into property development with good returns. I believe the management is rather prudent as well.

    1 of the main issue pointed out by a friend of mine is that it does not have any worker dormitory income in future. That could affect its net profit moving forward.

    ReplyDelete
    Replies
    1. Hi T.U.B : Thanks for dropping by and provide your valuable insights. The other "concern" I have is that this counter is not as liquid.. Anyway, let's see how it goes... Cheers!

      Delete

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