Saturday 13 August 2022

Results Quick Thoughts (Hotel Grand, Luminor, YZJ Finance, HG Metal, Tat Seng)

 With a flurry of results released, just took a few glance and give my thoughts.

1) Hotel Grand Central

-Have to say that the revenue(increase of 1%) and profit (decrease of 31%) is quite bad. With only Singapore recording an increase of around 20-30% in revenue while the rest of the countries such as Australia and New Zealand recording lower revenues.

-Even accounting for its disposal of its investment property which resulted in lower revenue, the net profit still came in lower as the staff cost increased much more

-The only positive thing to talk about is that fixed deposit has increased a lot as the disposal proceeds have been transferred into it.

-Considering even Hotel Royal was able to double its room revenue from 5m to 10.5m, Hotel Grand is literally a joke.

Unfortunately, it will likely be moved out of the portfolio 

2) Luminor Financial Holdings (Hodlings)

-Have to say i am sorry again but i am not going to use the picture. Results-wise was shockingly poor. 

-The press release stated reaping fruits of diversification but all i can see is diworsification from the financial statements. 

-The new business segment is profitable but unfortunately they have wrote off 9.8m of factoring receivables which is 15% of its factoring receivables.

-With that the company has scored 2 goals in 2 years. Firstly, commiting a forex mistake last year in China and had to be fined. Secondly, recording a decent amount of write-offs as mistakes in loan surface

-On the bright side, i believe both are honest mistake and we should move on. After all, the owner has given a loan of 38 million at 6.5% per year and also managed to issue shares at 30 cents sgd when it is trading at around 13.5 cents currenly for an acquisition.

-Realistically speaking, i think they can do a hat-trick but i am not sure how they are going to score the 3rd goal. Could be a spectacular write-off of acquisitions which has occurred before.

-Fortunately / Unfortunately i do not have a huge position so while i keep note of the company, i do not think it is a good time to be adding more.

3) YZJ Financial Holdings

-It has been surprisingly hard to read the financial statements of the company. In fact i think the best way to align interest is to ask the whole management team of Singapore to own shares equivalent to at least 50% of their annual salary.

-Jokes aside, i am surprised to see a reversal of allowance for credit which could mean that its bonds are doing well

-The company's balance sheet is also much more healthy now compared to December 2021 as Under Performing Loan has increased from 3.34% to 5.38% while non performing loan has decreased from 10.4% to 1.39%

-The company has done step 1 correct which is generating some loans to cash. Around 900 million has been converted to cash (400m and the rest to other receivables which is prepayment for potential investments)

-Step 2 will be to convert the next 2.4 billion in the next 12 months into cash and investments then followed by Step 3 which is converting the remaining 400m and focusing on its investment funds and management companies etc.

-Lastly, results did come in much worst. With the main culprit being fair value losses in its 'Unlisted Equity' which was valued by unobservable input.

4) HG Metal

-Results is ok, among the 4 companies covered so far, the best of the worst would be this company.

-Unfortunately the market does not seem to be very positive on the results as it has plunged more than 15% after its results release

-Inventory remain high, bank borrowings have increased as well to finance inventory purchase. If its inventory purchase, i might not be as concerned yet as these tend to fluctuate time to time and at time of recording it might just be high. While finance cost is slightly higher, it has not really reflect a big increase e.g a close to 290% increase in bank borrowings but financial cost increased by only 26%

- I believe the company is probably at close to full production levels. Key to profitability will be the demand of steel and price of steel which is linked to global price trends as well as local construction demand etc.

5) Tat Seng Packaging

-Results came in at better than i expected as i expected a 20-40% drop in profits

-Profit before tax came in at 18.1% lower while gross profit is 12.6% lower. Both showing good signs amidst the tough industry

-Capex in 6 months 2022 has also increased to 14.3 million. However, there is nothing to be excited about as there is no to the moon or to the ground technology purchase. 12 million was used to purchase a new property in January 2022. However, it has 7.5m of capital expenditure commitments currently which means that this year's capex will be one of the higher ones in the recent years

-Lastly, a depreciation of the yuan has hurt the company in the other comprehensive income segment as it has recorded a translation difference loss. Unfortunately, yuan in mid august is still weaker than in June and January

If i were to rank the results( not balance sheet) of the companies then it would be 

1st HG Metal

2nd Tat Seng Packaging

3rd YZJ Financial

4th Hotel Grand

5th Luminor Holdings

In reality all 5 are somewhat bad but someone would rank better among the bad.

As for Uni-Asia i need some time to digest the results. 

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