1 year follow-up, Boom Logistics (ASX:BOL)

Time for a one year review of Boom Logistics. At the moment the share is trading at 0.1 A$, which is equal to a -23 % drop.

Boom Logistics was included in the portfolio on the assumption that Plant & Property could be treated as current assets and that the stock was a net-net in disguise. Given this assumption the share price had a big margin of safety one year ago.

The company has faced decreasing demand during the last year, primarily due to due to decreasing commodity prices. However, the company has been been able to sell down underutilized equipment and repay debt so the basic assumption has proven true.

The company is not profitable, but management seem on-top of the situation. As P/NCAV ratio is lower today and there is progress the stock will remain in the portfolio one more year.

 

FY-14 FY-15
Price 0.13 0.1
F-score 3 4
Z-score 0.1 0.1
P/NCAV*  0.57  0.52

*Includes 60% of Plant & Property

Entered Coventry Group Ltd (ASX:CYG)

Entered a new Australian mining/industrial/resource net-net. Discounting an earlier dividend from the balance sheet I entered at 66 % of NCAV (ie 1.47 AUD).

As with most companies trading at big discount to net current assets Coventry has it’s share of problems. F-score is at the lower-end (4). Blanace sheet is cash rich and mangament is implementing a stragetic review. At the current brun-rate I expect the company to last quite a while, It may be a bumby ride though.

 

Entered PC Partner Group Ltd (HKG:1263)

The depressed HK markets triggered another buy, this time PC Partner Group. PCP is an OEM of computer parts, especially graphics cards. They’ve actually manufactured the graphics card (Zotac card) on the very PC I’m writing this.

PCP is trading at 0.42 NCAV. I see three reasons the company has such a depressed valuation.

  1. Personal computers are in decline
  2. They are tied up in litigation
  3. Asset/liabilities ratio is not very good.

Interestingly PCP has had a good run over the last years due to a graphics card boom, due to bitcoin mining. However, now the bitcoin miners have turned to other solutions – such as custom integrated circuits.

Entered Swing Media Technology Group Ltd (SGX:O2F)

How about a manufacturer of CD and DVD discs? Apparently demand for discs has not decreased as much as one (I) would expect, Swing seems to be doing pretty well.

I am a bit concerned about the historical share increases and swelling working capital, but I find it offset by stable margin and pretty good balance sheet.

Entered at P/NCAV 0.35.

Entered Oriental Watch Holdings Limited (HKG:0398)

I have put some of the proceeds from sale of Hengxin in Oriental Watch Holdings. Oriental is in the business of luxurious watches. They have a flag ship store in Hong Kong and some other stores across Asia. The business has slowed quite a bit during the last year but the balance sheet is strong. They also seem to have some control of cost, which is important as fixed costs and inventory write-downs have killed many net-net retailers before.

On the plus-side Oriental seems to be a shareholder friendly company with a good history of dividends.

Entered at @ P/NCAV of 0.43.

Eidai Kako CO LTD (TYO:7877)

Eidai Kako – the second Japanese manufacturing company this month. Priced at P/NCAV 0.61. Eidai Kako is in the industry of plastic resins, car mats etc. As usual a strong balance sheet and dividends.

The Japanese net-nets are now a substantial part of the portfolio, I am thinking if I should do anything about the currency exposure. I lean towards the opinion that the currency exposure is a nice diversification. I’ll probably not try any (imperfect) hedging – which as far as I know I could only do with mini-futures.

 

 

Charle Co Ltd (TYO:9885)

Charle Co is a Japanese company that sell women clothing and cosmetics. The share is trading close to net cash and negative enterprise value. Strong balance sheet.  The company is profitable and has a decent history of dividends.

I took a small position at P/NCAV 0.68 earlier today. The share will make a nice addition to the portfolio.