As the title suggest, I have carved out some allocation back to this counter again.
To put in context, i actually exit this position (at 0.775 to 0.81) in April 2025 as i had to consolidate my firepower.
On hindsight, of course the deployment was very successful but Infinity Development did very well as well.
Company Brief Context
Operates in the Shoe Adhesive Industry, with factories in China, Vietnam and Indonesia.
Vietnam remains their largest source of revenue but Indonesia has been growing in recent years. Also there is increased investments in Indonesia.
Currently the trailing PE is about 6 while the price to book is around 1.25
Balance Sheet Wise. It remains relatively healthy. Cash is sufficient to cover all liabilities. Receivables remain healthy despite a 23% increase in revenue
Reasons for Purchasing
1) Dual Listing on SGX.
With the dual listing, i think the prospectus will show more details when the company lodges it. Such as capacity , utilisation , new factory details , customer concentration and details.
The egm approval is on 25 September 2025, so i am definitely front running way earlier than the listing which might take a few more months.
Given by how the SGX Markets has been on going this year where a lot of small caps are starting to get into double PE .... 6 PE with capacity growth potential....its probably worth the risk taking.
2) Exports of Footwear remain strong in Vietnam , Indonesia and Bangaladesh
It might be a surprise but vietnam's footwear exports this period is the strongest. Based on this alone, i am really curious to see if this growth flows through to Infinity.
For Bangaladesh, their footwear exports is up around 10% .
3) Major Customer showing production growth
Yue Yuen has been the prime suspect as their largest customer , contributing 21% of the revenue in FY 2024.
Their shoe production remains positive. With increases seen in Indonesia and Vietnam
4) Competitor Margins remain intact
Nan Pao (4766 TPE) is one of their main competitor with around 3 to 4 times of Infinity's revenue. It is relatively assuring to see that their gross profit margin trend has been increasing and also increased in Q2 2025.
Concerns
1) Yue Yuen's shoe production growth has largely declined
To add to this, July Manufacturing is +0.5% while August Manufacturing is -9.70%
2) Competitor's Revenue is not increasing as well
3) Investor Relations Unfortunately does not reply, hopefully with the dual listing they would engage investors more.
4) With only 431 employees, it is hard to actually find any information about the company.
Conclusion
I am still a data driven person, so i will be encouraged to see increased export.
Furthermore, during times of poor export in 2023, the company did poor as well.
I will allocate some position before the prospectus and review again after the prospectus comes out.
Before i sold it in April 2025, it was around close to 10% of my portfolios.
I think the initial weightage of this amount will be acceptable.
Hi, would be you ok to share your portfolio and allocation? Curious to see what stocks you are holding. Thanks
ReplyDeleteIts on stockcafe (https://stocks.cafe/user/profile?username=zzxiaoboizz)
Deletethe link can be found under 'About the author' section as well
Hi, saw your position in Chen Hsong … would you write about it ? As a net net addict myself, may I know if you have any reason of adding to it ? Is it due to BYD contract on it ? Thanks. Trading like Ben Graham kind of style stock… Thanks for the write up..
DeleteThanks for the sharing. :)
DeleteCurrently no intentions to write about Chen Hsong.
DeleteThe BYD Collaboration is probably a sign of their technology being recognised and has been on going for 2-3 years already. Their largest customer is 3% of revenue so even if it is BYD it does not really contribute much. Which makes it really hard to 'assign an industry' to this company
i think the industry is recovering this year as seen from its peers.
Export led driven growth this year might surprise on the upside. Company's valuations remains well behind hkex and china listed peers
Solid Dividend Record coupled with Major shareholder is their own charity foundation which means the dividends by the company goes to this charity foundation to do their philanthropic activities
Having said that, it is a highly competitive industry in China and Globally, its hard for me to research and assess if their products have certain edge over their peers at this moment due to too many different sectors (car, house hold electronics, packaging etc) they can serve.
Infinity Development will have a 1-for-2 reverse stock split to consolidate the shares. Not sure when they will execute this and the impact on share price.
ReplyDeleteYea, they will have to consolidate to comply with the 20 cents sgd catalyst board trading rules. According to their announcement it would be on 20 October.
DeleteIn my view, the company's business fundamentals would be more important than the consolidation