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21-08-2015, 09:16 AM
(This post was last modified: 21-08-2015, 08:05 PM by CY09.
Edit Reason: Edits
)
Vested China Fishery at 0.070, 0.071, 0.082 and 0.083
While the announcement last night was due to investigations by regulatory authority, I do not think the damage will be so extensive to warrant such a sell down today.
Barring any investigations which reveals fraudulent account or over estimation of inventories, I believe China fishery's business is undervalued. Moving forward, China Fishery is likely to start reporting positive cash flow generation because it has greatly reduced its purchase of PPE for this FY unlike previous financial years since 2006. Furthermore with a dividend policy of 30%, one can expect about 0.3 SG cents dividend to be given this year ( I estimate 0.8 USD cents of earnings to be reported). Lastly, I expect an increase of profit by USD34m; 22.5 million from not needing to pay its 9% US $250 million bond and USD 11.5M from being able to fish in the upcoming season B. An increase in 34M of profits translates to an increase of 0.9 USD cents.
Hence I expect next FY, China Fishery will earn 1.7 USD cents (approx 2.3 SG cents). At its current price, I think there is value barring any financial fraud or cancellation fishing seasons.
While the announcement last night was due to investigations by regulatory authority, I do not think the damage will be so extensive to warrant such a sell down today.
Barring any investigations which reveals fraudulent account or over estimation of inventories, I believe China fishery's business is undervalued. Moving forward, China Fishery is likely to start reporting positive cash flow generation because it has greatly reduced its purchase of PPE for this FY unlike previous financial years since 2006. Furthermore with a dividend policy of 30%, one can expect about 0.3 SG cents dividend to be given this year ( I estimate 0.8 USD cents of earnings to be reported). Lastly, I expect an increase of profit by USD34m; 22.5 million from not needing to pay its 9% US $250 million bond and USD 11.5M from being able to fish in the upcoming season B. An increase in 34M of profits translates to an increase of 0.9 USD cents.
Hence I expect next FY, China Fishery will earn 1.7 USD cents (approx 2.3 SG cents). At its current price, I think there is value barring any financial fraud or cancellation fishing seasons.