Sin Heng Heavy Machinery

[specuvestor]

You have to be paid to wait. They need about $4.6m cash to pay the same amount of dividend as they used to pay. Is that a number that is achievable going forward?

[GreedandFear]

You have to be paid to wait. They need about $4.6m cash to pay the same amount of dividend as they used to pay. Is that a number that is achievable going forward?

We will see, the company has never been a great dividend payer...Your point is well taken. As a value investor, you need patience and the share price may go on a rollercoaster ride , so getting a decent dividend in the meantime makes a world of difference

[specuvestor]

They had 4% yield ex 18 Sept... but not instilling confidence after missing last year

Just curious... do you see any drivers or you are just... waiting?

[Quickbeam]

Well, I personally think catalysts are for uncertain people. Industries move in cycles, the whole industry is currently loss making. This reduces the incentive to invest and in the end solves the overcapacity issue. The improving commodity prices should feed into more capex for projects. This should lead to more demand for cranes in the end. When this will happen I dont know, but the industry will at some point need to become profitable again. If it doesnt, it makes more sense to liquidate over time and not to invest (letting your capex run at close to zero and distributing the rest). Looking at the other two listed operators in singapore, sin Heng appears to be the be managed. I dont need to get paid to wait, i'd be happy with no return for 3 years and then a doubling in year 4.

[specuvestor]

I know of people who invest like that but you would need to know the company very well. It is different ball game to be business partners vs being married to Your risk is of course if it doubles in 10 years instead of 3, your computation of ROIC / opportunity cost does not materialise, or sometimes some companies followed here in VB may actually never recover.

Getting paid also improves your cashflow and reduces your investment risk, eg knowing they actually have real cold hard cash from operating cashflow etc, and counterparty risk eg your invested principle is reduced. (That's why banks lend mortgage on declining balance basis)

Whether it makes more sense to liquidate or invest is not the OPMI's call unless you are management. So you must be able to trust the management. Like we always quote Buffett here: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."

That said I'm keen to monitor this company... thanks guys for the highlight.

[Quickbeam]

Yup theres a risk of it doubling in 10 years.. or going down by 30%. I dont know. As an OPMI is may not get an optimal result. It seems to offer a good risk/return profile if its a part of a diversified portfolio.

[karlmarx]

I agree with both. Because of uncertainties in profitability and the lack of dividends, it is more speculative. And if it is indeed compelling, I will only wager a small position.

[GreedandFear]

They had 4% yield ex 18 Sept... but not instilling confidence after missing last year

Just curious... do you see any drivers or you are just... waiting?

I am waiting based on the fact that the shares are trading at a cheap valuation and global economies are improving which should lead to more infrastructure / real estate spending. In Singapore, we are already seeing more frenzied bidding by real estate developers to replenish land banks. Once the land is bought, they need to construct. I don't think the sector will rerate until either (1) we see companies going private / acquiring other players or (2) profits start rising due to more construction activity.

[Quickbeam]

Just my two cents on waiting, it has often been my experience that an improvement in earnings is preceded by a run up in the share price. Boom logistics is likely to see improving results but these are not evident from the results yet. The stock however is up >100% YTD, on the anticipation of improvement (my wild guess). This has happened in the span of 3-4 months. This was preceded by the stock not performing for 3 years (I owned it then as well). It is difficult to time this correctly, but obviously more lucrative if you can do so. I have discovered through many mistakes I am not a good timer.

[karlmarx]

Stakes revealed; YSC becomes substantial shareholder. More assurance for opmi?

http://infopub.sgx.com/FileOpen/_Form%20...eID=474635