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It was recently reported that Shell in Bukom is planning a major maintenance and overhaul programme - detailed information on scale, timing and capex amount currently unavailable - and I suppose Mun Siong being an established existing maintenance services provider to Shell should stand to reap some good contracts and work.
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Surprised to see Mun Siong actually delivered a good Q3 with a respectable S$20.59M cash with very little debt.
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While this counter has good fundamentals, it is pretty much illiquid, with no or little turn-over each day. That and the low unit share price result in a number of risks, that have nothing to do with the operation of the company. In order to buy, it looks as if it is probably necessary to offer a significant premium, while, to sell it is probably necessary to offer a discount - creating a large effective spread. There is a risk of being 'tapped' for a low number of shares, which at the low price per share means the minimum brokerage dominates the cost (or return). Also, at some point there should be a share consolidation; when that happens, a small holding could end up with part of the holding being a fraction of the board lot.
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I suppose the main reason for the very low liquidity and volume done at the current historical low share price is because willing sellers have all but dried up, even though Mun Siong has some 583.4m issued shares (including the small amounts of warrants yet to be converted into new shares). Usually this kind of situation would suggest low price-risk and potentially above-average percentage price appreciation and total return (including from the yearly dividends) for those who can accept and commit to holding Mun Siong as a longer-term investment opportunity. For these investors, the short-term price risk, minimum brokerage issue, and the potential share consolidation, become secondary issues.
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22-12-2015, 04:19 PM
(This post was last modified: 22-12-2015, 07:13 PM by BlueKelah.)
On my watch list. Good net cash position but watch the dilutive warrants, still 4% of total float is in warrants.
Low liquidity is not a problem. Volume will jump when good news comes and the company is still making money even in these hard times.
However good news likely dependent on a turnaround in the industry its operating in. So far not doing too well.
sent from my Galaxy Tab S
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Considering the headwind in o&g and the coming financial crisis, I think the share price would stay depressed for a prolonge period of time.
[ stay vested without upsize ]
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