I found some people are talking about this counter in my favorite FB group - SGX Technical Analysis and Fundamental Analysis. The share price gained 100% in just 4 months, so I did a quick research on this company. What if it is the next AEM?
I have attached the 3 years chart below:
Wow, the share price might found a strong bottom at around 2 cents, and we can see that the volume started to came in, so is it going to form an uptrend now? No one knows. So I did decided to take a look at the recent financial report. Is there any strong FA to support the price or even push the price back to where it was 3 years ago?
The recent 3Q17 report shows that the company turned the net loss from 3Q16 and 9 months 16 into net profit in FY17. The company earned 9 million in 3Q17 compared with last year net loss of 2.8 million. That sounds fantastic! The 3 months earning per share is 1.47 cents and 9 months earning per share is 2.37 cents. With current price, 9 months earning per share indicates that the share is currently trading at around 1, if 4Q result is similar with 3Q result. So is the share super undervalued?
However, we must know where did that impressive profit came from. The company recorded a super high other income in 3Q result and 9 months result. The report explained that the company actually earned such high other income by selling their disposal of No. 4 Sungei Kadut Street 2 and at 55 Kranji Crescent. Uh huh, so the impressive results were contributed by selling non current assets of the company. If we take a closer look at the report, even though the gross profit increased significantly compared with last year results, the gross profit is not that high to cover their administrative expenses! Income tax for Q3FY17 amounted to a credit of $0.3 million as compared to $0.3 million tax expense, mainly due to the reversal of tax provision in current period. The company is still in loss zone in 3Q17 even with income tax credit without the huge other incomes!
I believed that the company has not yet fully turn back into profit zone yet, but good news is the company's loan decreased from 109.8 million to 78 million, which will decrease their finance cost. The order book currently stands at approximately 157 million, which is still quite healthy. However, the debt to equity ratio still remains high and majority of the impressive total comprehensive profits came from selling the properties. I don't think current FA will support the current share price or even push it to uptrend. The company still needs to work on getting a better quality of balance sheet.
Conclusion, with current FA (quick study, not a comprehensive one), I won't chase the shares. However, if the company can produce a better balance sheet with sustainable profit, I will look back into this company again. But for now, I will choose to watch show only (:
DYODD huh.
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