Dutech Holdings

[brattzz]

good indicator BlueK,

MOG still down, but steel supply is being controlled, so price is creaking up! yeah!
quite sharp to see it being reflected from dutech's safes!

[MINX]

I have added a bit after the price dipped to 48.5 cents today; doubt if it will go back to 44 cents at the present rate it is growing. Based on pure earning power alone, I estimate its intrinsic value at 70 cents, so if we apply a 50% margin of safety, should buy only at around 46.5 cents. But if I factor future growth, then I would give it an intrinsic value of 90 cents, which means it's a bargain to go in even at 50 cents. The only reason why I hesitate to go in heavy is because it's after all, still an S-chip, but it's financial performance the last 8 years (have not analysed FY16 yet) has not given me any reason to suspect any hanky-panky in this company. But still, caveat emptor; just my 2 cents worth.

Intrinsic value of 70cents... that's pretty much ard what I got from my calculations based on projected FY17 earnings.
In Q4 results, they conservatively wrote off some assets, wrote of some receivables, and in the coming quarters, will be amortizing the goodwill.
All that will be a drag on earnings, but in the long run, is good for the company
FCF is still +be despite having to do 2 acquisitions in FY16, both funded internally!

Intrinsic value of 70c, to cater for all the known risks & the unknown ones, a good entry price is 35c, correct? 

Huh...
in that same vein, a good entry price is 1 cent!

I don't think we can just fix arbitrarily a 50% MOS. It depends on the industry, the business and the management.
For eg. if the industry typically trades at a substantial discount to BV, then your MOS has to be wider to account for the fact that the real value is always at a discount anyway.
If the business is funded by a lot of debt, you might need a wider MOS because you don't know when the environment will change and credit dries up etc.
I really wouldn't try to second guess the craziness of the markets.... but I highly doubt you'd see 35 cents anytime soon, barring a GFC in 2017.
I bought the 570,000 in 2015 when it was around $0.27,28
and most recently added 60,000 in 2016 when it was around $0.45.
IMHO that's a price with a good enough MOS. I'd add again if it reaches there, and if Dutech isn't a large enough part of my portfolio.
Gotta pay some attention to portfolio allocation too, previously I made some mistakes with position sizing.

I see...I am unfamiliar with this company, so I put on some extra padding before I dip my toes in, so I don't get sleepless nite. Anyway, with the steep rise in steel prices, metric still bleeding, the earning outlook is muted at best for 2017. Perhaps, I might still be able to stick a leg in at 35C...

[jenson]

Hmm....I must agree with bro TTI, me, too, don't think it will go down to 0.35 cents easily, back to +/- 0.46 level is more likely.

[mulyc]

Attended the AGM today. Very rosy and healthy picture all round, although the main highlight for me was a question posed by a shareholder that since Dutech is celebrating 10 years of continuous growth this year, will there be a special something (dividends?) for shareholders? *the room laughed* To which Johnny Liu let out a smile and said something will be announced in two weeks time.

If anyone else was present, please confirm what I heard thanks.

DYODD. Vested.

[TTTI]

Attended the AGM today. Very rosy and healthy picture all round, although the main highlight for me was a question posed by a shareholder that since Dutech is celebrating 10 years of continuous growth this year, will there be a special something (dividends?) for shareholders? *the room laughed* To which Johnny Liu let out a smile and said something will be announced in two weeks time.

If anyone else was present, please confirm what I heard thanks.

DYODD. Vested.

With 290mil RMB in cold hard cash, they sure can afford to increase the div.
Not sure if they would have problems taking cash out of China to remit to Sg though.

[sgmystique]

It was my first Dutech AGM but a very pleasant one nonetheless!

The overall feel I got was that Dr. Johnny Liu is really the driving force behind Dutech and he is I would say quiet cautiously aggressive. He knows where he wants Dutech to head in the years to come and he will not hesitate in acquiring more companies if he finds one that fits the bill and the purchase price makes sense (Meaning he should be able to break even in 2-3 years and then start making profits from the acquired business). Considering their track record with Format I guess they have good experience in this area and should be able to handle integration of the newly acquired units (Krauth Technology GmBH & Metric Group Holdings Ltd) well.

This will be one stock to buy and keep and their true value will be uncovered in due course of time as long as they are able to create value from their acquisitions. I would classify Dutech very clearly as a growth stock and deifnitely not as a dividend stock. Considering that I would guess the market is still looking at Dutech through the S-chip tainted lenses in terms of valuations. The only way to improve their image would be for Dr. Liu to consistently keep delivering on their plans.

Looking at the clients that Dutech has and after meeting Dr. Liu today I personally feel quiet comfortable with the organisation. For additional comfort Robert Alexander Stone (A pretty well known individual investor on the SGX) holds a 6.49% stake in Dutech.

[zz...]

 For additional comfort Robert Alexander Stone (A pretty well known individual investor on the SGX) holds a 6.49% stake in Dutech

He is on china Sunshine's top 20 shareholders too owning 11m shares in its AR 2016

[mulyc]

Considering that I would guess the market is still looking at Dutech through the S-chip tainted lenses in terms of valuations. The only way to improve their image would be for Dr. Liu to consistently keep delivering on their plans.

This is exactly the part which I think the market is discounting. One shareholder (it could've been you, bro sgmystique!) rightly pointed out that we were voting for the confirmation of two directors and yet both weren't present at the AGM. To this, Dr Liu confidently replied that it did not seem to make sense that they fly one of them from the US and one in Europe just to attend this and incur high costs for a one hour AGM session. 

While I appreciate that Dr Liu is trying to save costs here, I would agree with that shareholder that they could have planned for a televised conference so that shareholders can put a face to these significant stakeholders in the company. It is such things that make the S-chip stigma abit hard to remove (what if this or that is bogus?).

That said, having followed Dutech for so long, one does feel a sense of confidence in the company. It is becoming very global under the guidance of Dr Liu, so maybe in time the market might view it more as a global company.

[Jacmar]

 For additional comfort Robert Alexander Stone (A pretty well known individual investor on the SGX) holds a 6.49% stake in Dutech

He is on china Sunshine's top 20 shareholders too owning 11m shares in its AR 2016

I think it is not wise to invest base on another SSH. Robert Stone has his fair share of s-chip duds. go google and you will learn more of his s-chip mistakes.
You need to think independently. 

For Dutech one way to get rid of the s-chip stigma is show me the money n it can come in the form of higher divi. Dutech div is low n there lies the problem.

[lanina1]

 For additional comfort Robert Alexander Stone (A pretty well known individual investor on the SGX) holds a 6.49% stake in Dutech

He is on china Sunshine's top 20 shareholders too owning 11m shares in its AR 2016

I think it is not wise to invest base on another SSH. Robert Stone has his fair share of s-chip duds. go google and you will learn more of his s-chip mistakes.
You need to think independently. 

For Dutech one way to get rid of the s-chip stigma is show me the money n it can come in the form of higher divi. Dutech div is low n there lies the problem.

I cannot agree the 2nd part above. There are many ways of "show me the money", and giving out dividend is only one of them. One of the other ways is expanding their core business without asking money from their share holder or borrowing. Dutech acquired so many good quality Euro companies using their own FCF, there lies no problem for me as I am looking at a growth company, not a dividend company.