Global Invacom

[ARC]

Mgt is using coy's money to buyback shares. This seems to be having the effect of pushing up the price as they 1) clear out sellers at lower levels, 2) using buybacks to set new reference price(s). Could that generate sufficient interest/momentum upward, which could be self sustaining?

Stock appears cheap relative to normalised earnings, though earnings visibility is poor and lumpy, due to nature of orderbook biz.

[CY09]

Curious besides trading lower than NAV and having most assets in receivables and cash, what are the other plus points of this company?

[ARC]

I would suggest taking a closer look at the balance sheet

Otherwise, they appear to have certain R&D/IP which might be worth something/might give them an edge. They have recently managed to diverify customer base/secure new customers (Astro in M'sia).

On a macro level, the satellite industry is seeing structural growth due to declining cost of satellite transmission. So the company enjoys some amount of tailwind. Whether one can make profits as a result is a different question of course.

Mgt is motivated since their entry cost in the business is much higher. So 1) they believe the company is worth more, 2) they are incentivised to move the stock price up.

Those are broadly the key points, in my humble opinon. I must admit that I have no special insight on their profit outlook though.

So...Caveat Emptor

[ARC]

Coy won another US$16mn repeat order from Astro. Will be recognised in 2HFY13 + 1HFY14.

[CY09]

Extrapolating the company's cashflow for 1st half to full year,
Free cashflow is about USD5.65M (I ignored its recent USD 3M acquisition and working capital changes [approx. USD 2m]).

This translates to about expected 2.9 cents of free cash flow generated. Using current price, that's about 6.75X. Is it considered value for money?

Normally what is the P/FCF range that investors will consider as bargain

[ARC]

Extrapolating the company's cashflow for 1st half to full year,
Free cashflow is about USD5.65M (I ignored its recent USD 3M acquisition and working capital changes [approx. USD 2m]).

This translates to about expected 2.9 cents of free cash flow generated. Using current price, that's about 6.75X. Is it considered value for money?

Normally what is the P/FCF range that investors will consider as bargain

I am not sure how you arrived at your numbers. I have a different set of numbers on my end. Nonetheless, 6.75x P/FCFE translates to a 14.8% FCFE yield. That by most standards, should not be considered expensive, imo. After all, where can you get that sort of yield - in a bank deposit?

Whether it is a bargain/value for money, will require a more thorough assessment of the sustainability of the cashflow and the ability of management to turn the original Radiance business around, integrate it & grow the consolidated group, in my view.

Admittedly, this is not a classic value stock as it seem to lack certain characteristics such as a strong competitive moat. And the margin of safety does not appear to be that great, imo. This is due to a lack of visibility in general, amongst other things such as competition, capital allocation and acquisitions

Valuations are on the low side. But only if you assume that earnings could normalize to previous levels or go even higher.

Overall, one has to assess whether the risk/reward make sense, based on one's own calculations.

Caveat emptor.

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[ARC]

Stock has been moving and is moving today.

Caveat emptor.

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[sykn]

Hi all, it's been 5 months since the last post, and I guess G Invacom's share price has gone up quite a bit. I just did a study of this company and think it is still worth while to go in at 48 cents but only if I'm prepared to go long on this counter, although this price is a bit on the high side and track record wise, the performance was not that great in 2011-12; it only turned around in 2013. Would anyone like to comment on that? Thanks in advance.

[CY09]

Decent P/FCF yield of about 6.25%, i think its upside is about 10%, not worth the upside when there are other stocks selling at much better discounts.

Furthermore its operation in M'sia may be affected by next yr GST hike and Malaysia's political stability is waning. And maybe its better to wait to see the full year results of Raven acquistion to determine.

[sykn]

Thanks for your views; I also feel it's a bit pricey now. But more importantly, I can't yet see the sustained high ROE track record for this one, hence I'm a bit doubtful on going by one good year's data. The other thing is that its current tech advantage is not easy to hold onto, as SATCOM is a fairly mature technology, though traditionally mismanaged by telcos who are more interested in "milking" the cash cow than investing in R&D to offer better services to customers. But now, even Sing&Tel is waking up to the digital era, but instead of building a proper tech base, it's planting "instant trees" by doing some rather risky M&A moves IMHO! Thankfully, I only have a few shares in my CPF account - gifts from PM GCT's era.